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09-08-2018, 20:54   #1
Shandon
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Returning a parental gift - tax

I understand receiving a substantial gift from parents towards a mortgage deposit is not subject to tax. What if you don't then use this gift and want to pay it back in a lump sum to them? Would this then be liable for tax?
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09-08-2018, 21:24   #2
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I understand receiving a substantial gift from parents towards a mortgage deposit is not subject to tax. What if you don't then use this gift and want to pay it back in a lump sum to them? Would this then be liable for tax?
If you don’t accept the gift here’s no liability.
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09-08-2018, 21:26   #3
Shandon
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If you don’t accept the gift here’s no liability.
So if the gift was in your account for 6 to 12 months and is then just paid back there is no liability?
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09-08-2018, 22:00   #4
The Student
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Technically you would be liable for dirt tax and income tax on the interest less the dirt paid. But given the low rates of interest you would not have a tax liability.
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09-08-2018, 22:02   #5
Shandon
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Technically you would be liable for dirt tax and income tax on the interest less the dirt paid. But given the low rates of interest you would not have a tax liability.
Thanks. Explain that a bit more. Say for eg it was 10k
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09-08-2018, 22:14   #6
Lumen
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I understand receiving a substantial gift from parents towards a mortgage deposit is not subject to tax.
Where did you get that information? AFAIK it's tested the same as a gift for any other purpose, counts towards your lifetime threshold.
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09-08-2018, 22:16   #7
Shandon
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Where did you get that information?
Nowhere official just heard it wasn't from various sources. Is it?
I had presumed that part of it was OK but was wondering if you never bought but in the meantime saved the money and paid it back to them would that be liable.
Maybe both ways is!
Anyone know for sure??
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09-08-2018, 22:20   #8
Shandon
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Where did you get that information? AFAIK it's tested the same as a gift for any other purpose, counts towards your lifetime threshold.
Sorry only saw this part now. I was aware it was part of the lifetime threshold of 310k alright. But that will never be reached anyway so its immaterial!
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09-08-2018, 22:28   #9
GingerLily
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If it was a loan rather then a gift, and you returned it - then you don't think you owe tax, provided that the amount of interest you would pay if a bank loaned you the money, is less then the tax free annual gift you can receive (3k per parent)
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09-08-2018, 22:32   #10
TheChizler
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Technically you would be liable for dirt tax and income tax on the interest less the dirt paid. But given the low rates of interest you would not have a tax liability.
Same as any other money in a bank account earning interest: your bank takes care of this.
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10-08-2018, 07:20   #11
The_Conductor
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If it was a loan rather then a gift, and you returned it - then you don't think you owe tax, provided that the amount of interest you would pay if a bank loaned you the money, is less then the tax free annual gift you can receive (3k per parent)
The parents could have a tax liability associated with the return of the gift- as the rules on receiving a gift are a lot more generous from a parent to child- than they are vice versa. Hypothetically- the parents would be liable for income tax on the value of the gift from their child back to them- unless it could be shown that there was a formal loan arrangement in place for the gift (and of course depending on the size of the gift and the thresholds).

A handy way of returning the cash (depending on the size of the amount) would be in 3k increments on an annual basis over 3-4 years- which would be a tax efficient manner of doing it (for everyone concerned).
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10-08-2018, 08:07   #12
The Student
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The parents could have a tax liability associated with the return of the gift- as the rules on receiving a gift are a lot more generous from a parent to child- than they are vice versa. Hypothetically- the parents would be liable for income tax on the value of the gift from their child back to them- unless it could be shown that there was a formal loan arrangement in place for the gift (and of course depending on the size of the gift and the thresholds).

A handy way of returning the cash (depending on the size of the amount) would be in 3k increments on an annual basis over 3-4 years- which would be a tax efficient manner of doing it (for everyone concerned).
The inheritance limits from parent to child and child to parent are the same. Both form part of category A. So the limits to parent to child and child to parent are the same.
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10-08-2018, 08:22   #13
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The inheritance limits from parent to child and child to parent are the same. Both form part of category A. So the limits to parent to child and child to parent are the same.
Not correct. Child to parent or grandparent is same as to grandchild brother or sister it’s category B 32500 lifetime limit.

My thoughts would be to keep it. It will form part of the lifetime threshold. Unless it was 80% or more of 310,000 you won’t have made the IT38 return. Or you could get parent to sign letter stating it was a loan and return it. Or return in increments of €3000 pa as the conductor suggested, small gifts up to that amount can be made to anyone annually. It all depends on the amount we’re talking about here.
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10-08-2018, 08:24   #14
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To add - you might get better responses in taxation forum as this is tax rather than property related
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10-08-2018, 08:49   #15
The Student
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Not correct. Child to parent or grandparent is same as to grandchild brother or sister it’s category B 32500 lifetime limit.

My thoughts would be to keep it. It will form part of the lifetime threshold. Unless it was 80% or more of 310,000 you won’t have made the IT38 return. Or you could get parent to sign letter stating it was a loan and return it. Or return in increments of €3000 pa as the conductor suggested, small gifts up to that amount can be made to anyone annually. It all depends on the amount we’re talking about here.
My apologies you are correct it is category B not A as I referenced.
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