Can my parents gift my family of 4 €24000

L

landlord

Registered User
Messages
1,043
Can my parents gift my family of 4 a lump sum of €24000 in one year without triggering any capital acquisition tax liability. All of the funds would go into my personal account and would then be used to pay down my mortgage. Thanks.
 
Yes, assuming you haven't already used up your 335k CAT lifetime allowance.

What you do with the funds is not relevant.
 
In terms of planning for CAT, it may make sense for your parents to divide the 24k among the two spouses.
 
Each parent could gift 3000 euro to you, per year, without reducing your lifetime allowance. So you could get 6000 euro per year and your spouse could get another 6000 euro. If your parents do this for 2 years, you and your spouse could receive the 24000 euro without any lifetime allowance reduction.
 
Last edited:
S class said:
Each parent could gift 3000 euro to you, per year, without reducing your lifetime allowance. So you could get 6000 euro per year and your spouse could get another 6000 euro. If your parents do this for 2 years, you and your spouse could receive the 24000 euro without any lifetime allowance reduction.
Click to expand...
I think you may have misunderstood…
My father “gifts”…
€3000 to me
€3000 to my wife
€3000 to my daughter
€3000 to my son
My mother does the same ….but all the money (€24,000) I use myself to pay off my mortgage.
 
Yes Landlord, that is perfectly fine. But I would ask your parents to give the €3K to each person separately, so your bank account gets €3K from your mum and €3K from your Dad, your wife gets the same from each of them into her bank account and the she transfers it to you etc. it just gets a bit trickier with the kids, €3K going into their acc and going back out into yours. If revenue ever looked at it, and doubtful if they would they would probably say it is a scheme for your parents to transfer money to you via your kids. What I would suggest is wait until Dec and have your parents give you and your spouse €3K each in late Dec and again in early Jan. Movement of money between spouses is fine.
 
Clamball said:
Yes Landlord, that is perfectly fine. But I would ask your parents to give the €3K to each person separately, so your bank account gets €3K from your mum and €3K from your Dad, your wife gets the same from each of them into her bank account and the she transfers it to you etc. it just gets a bit trickier with the kids, €3K going into their acc and going back out into yours. If revenue ever looked at it, and doubtful if they would they would probably say it is a scheme for your parents to transfer money to you via your kids. What I would suggest is wait until Dec and have your parents give you and your spouse €3K each in late Dec and again in early Jan. Movement of money between spouses is fine.
Click to expand...
Kids keep the money, and kids pay their own college fees/books/pocket money/sports grinds. Sounds like good tax planning to me.
 
And nothing to stop the kids using their money to contribute to household expenses like bills, fuel for cars, groceries etc that will free up more household budget to overpay the mortgage.
 
Not allowed according to Dominic Coyle's answer to a query (22/01/2023) in The Irish Times:

"I can certainly see the attraction of such a scenario, but the answer is a resounding no. At least not in the same year. There is a process where you could set up such a structure but there would be a minimum three-year lag in you receiving the cash.

The small gift exemption .................is most often used within families for parents and grandparents to pass assets on to next generations over time, but it is not limited to that. You could give that amount to an elderly neighbour, a friend, or even someone you met in the street, with no tax bill worries.

The only requirement the Revenue Commissioners have is that the benefit of the exemption applies specifically to the person receiving it. So, in your example, if your father gifts €3,000 to eight people who, in turn, gift it to you in that same year, Revenue will consider that your father has gifted you the €24,000 in each year and slice a further €21,000 a year off your tax-free threshold on any eventual inheritance......

....The practice you are considering is called gift-splitting and it is addressed specifically by the law – the Capital Acquisitions Tax Consolidated Act (Catca) 2003 – in this case, in Section 8(1), which covers all gifts and inheritance, not just the small gift exemption.

It does allow for a situation where a person makes a gift to someone else with the specific intention that the recipient then gifts that same sum to another person – your scenario of your father gifting eight people who would then gift you. However, in order for the onward gifting by the recipient to you to be free of tax implications, they would have to wait three years before passing on the money to you. Otherwise it is deemed to come to you direct from your father......"

www.irishtimes.com

Trying to maximise inheritance using the small gift exemption rule

Q&A: The Revenue Commissioners have rules in place to stop valuable tax relief being abused
www.irishtimes.com www.irishtimes.com
 
So in the scenario where the money does not come back from child to parent, as the OP proposed would work. As in the grandparent gifts it to child for education. Child does not transfer to parent. In fact child must not transfer.

Besides which, right now it's August, so each grandparents can gift 6K to son, 6K to wife. And same on 1st Jan, and they are at 12K.

Is the 3 year rule a revenue rule or the legislation I wonder.
 
Bronte said:
Is the 3 year rule a revenue rule or the legislation I wonder.
Click to expand...
Dominic Coyle literally points to the answer in his article:

Capital Acquisitions Tax Consolidation Act 2003, Section 8

The electronic Irish Statute Book (eISB) comprises the Acts of the Oireachtas (Parliament), Statutory Instruments, Legislation Directory, Constitution and a limited number of pre-1922 Acts.
www.irishstatutebook.ie
8.—(1) Where a donee takes a gift under a disposition made by a disponer (in this section referred to as the original disponer) and, within the period commencing 3 years before and ending 3 years after the date of that gift, the donee makes a disposition under which a second donee takes a gift and whether or not the second donee makes a disposition within the same period under which a third donee takes a gift, and so on, each donee is deemed to take a gift from the original disponer (and not from the immediate disponer under whose disposition the gift was taken); and a gift so deemed to be taken is deemed to be an inheritance (and not a gift) taken by the donee, as successor, from the original disponer if—

(a) the original disponer dies within 2 years after the date of the disposition made by that original disponer, and

(b) the date of the disposition was on or after 1 April 1975.

(2) This section shall not apply in the case of any disposition (in this subsection referred to as the first-mentioned disposition) in so far as no other disposition, which was connected in the manner described in subsection (1) with such first-mentioned disposition, was made with a view to enabling or facilitating the making of the first-mentioned disposition or the recoupment in any manner of the cost of such first-mentioned disposition.
Click to expand...
 
ClubMan said:
Dominic Coyle literally points to the answer in his article:
Click to expand...
I realise that but cannot read the article. I think it's good though you've put up the link to the act. I've no idea who Coyle is or his qualifications but I'd imagine there is some kind of disclaimer on legal advice in newspaper columns. - not suggesting he's incorrect. Anyway it seems we are all clear now on how to do correct tax planning on giving away money with zero tax. Currently not a problem I have. But always good to know the correct tax avoidance procedures. Wouldn't want to get caught out in tax evasion.
 
Thanks, everyone, so the simplest way of dealing with this considering all of my parents funds will be used to pay off my mortgage……
My parents gift myself and my wife, €12,000 now and €12,000 again, January 1 2024.
I won’t get the kids involved!!
 
Hi All,

My mother wants to gift me 20k to pay for upgrades to my home (new windows etc). Am I right in saying all I can get is 3000 and then will have to pay tax on the other 17000? Sorry if its a dumb ass question. Trying to understand CAT. thanks folks.
 
Last edited:
No you would not have to pay any tax now, but the amount would be counted against you lifetime CAT exempt amount (335K) from your parent (less 3K). If you had 2 parents, you could reduce the taxable amount by €6K, if your mum gave you €10K and your Dad gave you €10K.

Citizens Advice information here

Otherwise if it is just your mum giving you €20K in 2023 and she suddenly dies in 2024 and leaves you €350K. You would owe CAT on any amount over 335K. Which would seem like €350-€335 = €15K. But you have to consider any gifts over €3K in any one year so it would be (350-3)+(20-3)-335K which would be €29K. So in this example you would be liable to pay 33% of €29K in CAT when your Mum died, rather than 33% of €15K if you had not gotten the gift in 2023.

So take the gift now and record it against any inheritance (over 335K) from your Mum when she does pass away.
 
You must log in or register to reply here.
Back
Top