Sibling wants to give me a substantial gift

D

DinnyMac

New Member
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Hi,
My sibling inherited our family home (they were the sole beneficiary, and I'm fine with that).

It has been a couple of years and they have decided to sell the property and just move on,

but they had a chat with me where they believed I should have inherited the home and they want to financially compensate me when the house is sold.

The property would probably fetch around €430K, they would need to get back €50K that it has cost them (all legit and accounted for) and then they would split the remainder with me (I didn't inherit anything, as it was just the property, location location location!)

so theoretically I could get €190K.

But I see major tax liabilities with this. I could be gifted €3K and not sure what the other is called but another €32.5K, leaving me with a tax liability of around €50K on the remained (@33% I think).

Just wondering if my sibling loaned me the money (interest free) to pay off most of my remaining mortgage (of around€200K), how could this work, would the loan have to be repaid

I just don't know. Any advise would be very welcome.

Thanks...
 
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The fact that it was related to your sibling's inheritance is irrelevant.
What you do with the money is irrelevant.

If your sibling gifts you €190k, assuming you have no other gifts in this category, the tax calculation will be

Gift: €190k
threshold: €32,500
Less small gift exemption: €3,000
€154,500

Tax at 33% €51,000

Brendan
 
I suppose, in theory, your sibling could gift you €3,000 a year for the next 50 years.

But, in practice, I think you should just face up to the tax bill.

Ask your sibling to give you a gift of €3,000 before the end of this month to use up this year's small gift allowance.
 
If your sibling is married, their spouse could also gift you €3,000 a year.

If you are married, both of them could gift you €3,000 each per year.

I don't know if Revenue would regard this as planning or evasion.

Brendan
 
dodo said:
If your brother has children then they can also gift you 3k a year tax free, if you have children they can also receive 3K a year. Didn't you win a bet of 100k with your brother ,
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Wouldnt the children need to have 3k to be able to gift it?
 
He could of course lend it to you in an interest free loan but when he dies you would owe his estate the €190K (or the €154K if you followed the advice above.). That could be the day after he gave you the loan or in 50 years time but you would still be liable.

Your simplest option is to pay the €50K tax and use the windfall as you see fit. That way there is no future liability.
 
Probably worth looking for some professional advice here. I would be checking to see if there is an option to get an interest free loan and then each year get a tax feee gift, ideally as Brendan says including spouses to make it 12k p.a. to in effect write off part of the loan. The OP would need to keep in an account the amount that would be due back on the death of the sibling.
 
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Clamball said:
He could of course lend it to you in an interest free loan but when he dies you would owe his estate the €190K (or the €154K if you followed the advice above.). That could be the day after he gave you the loan or in 50 years time but you would still be liable.
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That could likely be handled via a will.
 
But it still would be a Group B gift tax if the brother left the loan as a gift on his death.

Unless the brother was diligent each year with the €3K gift tax, maxing up to €12K pa if spouses were involved. So you pay the brother €12K off the capital each year for 12/13 years. And at the same time you and your spouse receive a gift of €3K each from your brother and their spouse. I just cannot see it working without a lot of diligence on everyone’s part.
 
There is a number of way you could deal with this but i think it is a case of how much hassle you want now and in the future. Claiming the small gift exemption this year and getting the balance next year may be the straight forward answer keep everything cut and dry. A loan could work either by using small gift exemption to reduce each year or the loan is wrote off as part of their estate. these may lead to other tax issues not foreseen. Also could a issue arise with a loan they need the money suddenly and forget that it was a gift and look for the money back.
 
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