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Gift Tax - €3,000 yearly allowance

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  • 20-01-2020 8:21pm
    #1
    Seoda1
    Closed Accounts Posts: 77 ✭✭


    Hi
    I am in a situation that my parents have gifted me money and have used up my inheritance allowance ... which is fine

    My question is, if they were to give me €50,000 now for example, can I deduct €3,000 a year from each parent (€6,000) over the next 8 years? And not have to pay inheritance tax on it?

    If so ... 2 questions
    1. When do I tell Revenue about this, st start or the end?
    2. Every year, do I write a simple letter to the parents saying along the lines ... Thank you for the €50,000 loan, as suggested by you, I acknowledge a gift from you, €6,000 (€3,000 each) so I now owe you €44,000

    Or am I completely wrong?

    Thanks, appreciate any advise


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    #2
    Calahonda52
    Registered Users Posts: 12,194 ✭✭✭✭Calahonda52


    That wont work, you can only RECEIVE the 6 per annum

    “I can’t pay my staff or mortgage with instagram likes”.



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    #3
    irbx
    Registered Users Posts: 100 ✭✭irbx


    Calahonda52 wrote: »
    That wont work, you can only RECEIVE the 6 per annum

    Plus also revenue can look at the loan as been taxable as you getting a loan tax free. IE the interest you would have payed to bank for the loan is not been payed so it a benefit to you as getting a cheap loan.


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    #4
    jimmy456
    Registered Users Posts: 90 ✭✭jimmy456


    Why couldn't it be structured as follows:

    Interest free loan of 50k to be repaid at a rate of 6k per annum. Each year then the parents gift the repayment of 6k?

    Ignore interest for now as this can sorted by the small gift exemption as well.


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    #5
    Calahonda52
    Registered Users Posts: 12,194 ✭✭✭✭Calahonda52


    jimmy456 wrote: »
    Why couldn't it be structured as follows:

    Interest free loan of 50k to be repaid at a rate of 6k per annum. Each year then the parents gift the repayment of 6k?

    Ignore interest for now as this can sorted by the small gift exemption as well.

    If you want to do this it needs an interest rate, otherwise the revenue will apply their rate which is 18% I think from memory

    “I can’t pay my staff or mortgage with instagram likes”.



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    #6
    ArrBee
    Registered Users Posts: 791 ✭✭✭ArrBee


    Could you not say that it's against your religion (I guess your parents religion) to charge interest and that enforcing such a thing was unconstitutional?


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    #7
    thegolfer
    Registered Users Posts: 346 ✭✭thegolfer


    Calahonda52 wrote: »
    If you want to do this it needs an interest rate, otherwise the revenue will apply their rate which is 18% I think from memory

    The interest rate is the rate fore gone by the parents if it was put on deposit, market interest rate of 1.5 % would apply. Not heard of 18%.


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    #8
    thegolfer
    Registered Users Posts: 346 ✭✭thegolfer


    ArrBee wrote: »
    Could you not say that it's against your religion (I guess your parents religion) to charge interest and that enforcing such a thing was unconstitutional?

    There is taxation provision for Islamic financing, however in this instance not applicable.

    Your argument would not hold up once scrutinized.


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    #9
    relax carry on
    Registered Users Posts: 4,072 ✭✭✭relax carry on


    thegolfer wrote: »
    The interest rate is the rate fore gone by the parents if it was put on deposit, market interest rate of 1.5 % would apply. Not heard of 18%.

    Think the poster may be confusing the interest rate for BIK which can be 13.5%. Not relevant here of course.

    https://www.revenue.ie/en/gains-gifts-and-inheritance/valuation-date-and-the-value-of-certain-benefits/free-use-of-property-and-interest-free-loans.aspx


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