# Revenue charging tax for adult children living at parent's house



## Up Rovers (24 Jan 2018)

Hi All,

Just wondering if anyone could give me an approximate amount that Revenue would charge if adult children (over 25 x 2) were to reside rent free at parent's house?  The house would only be valued at approximately €300,000 and certainly not the €1m as quoted in Revenue article below.  Following on from this thread I had thought that it would not be a problem but looking on-line it seems to be a runner

https://www.askaboutmoney.com/threa...-in-and-as-an-investment.204685/#post-1526111

As we are already considering one parent in each house would this make any difference to the Revenue charges and let them see that we are not renting to anyone.

I have also read this article which would tie-in with the Revenue approach

https://www.independent.ie/business...eritance-and-it-could-get-worse-35018747.html

"Such children could still be getting some financial support from their parents when they're older than 25. "Once a child over 25 gets more than €3,000 a year from each of his parents [€6,000 in total], a tax bill could be triggered for the child in the future," says Casey-Grehan"

This paragraph taken from this Revenue pdf also refers

[broken link removed]

Free Use of House
Parent buys a house for €1 million and allows his 30 year old daughter have the free
use of the house indefinitely. The annual rental value of the house is €36,000. The
free use of the house is a gift equal to the annual rental value each year (less the
annual small gift exemption of €3,000).
If two or more of the parent’s children have
the free use of the house, the value of the gift is shared.
If the child ultimately inherited the house, that inheritance could be eligible for
exemption from CAT under the
principal private residence exemption in section 86
CATCA 2003
once the conditions governing the relief were satisfied.

Hoping this post is not too long winded and thanks for any advice in advance.

Up Rovers.


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## Brendan Burgess (24 Jan 2018)

Up Rovers said:


> Parent buys a house for €1 million and allows his 30 year old daughter have the free
> use of the house indefinitely.



I had never heard of a problem of children living rent-free with their parents. I don't think Revenue is remotely interested in this. 

If the father and mother are living separately, and the children live with one of them, that would not be taxable either. 

What they are trying to avoid is where a father buys a house as an investment and allows the son to live in it on his own rent-free.  They would be subject to the CAT rules I presume. Although I doubt if they are enforced. 

Revenue might become interested if the parents claim that they have separated but, in practice, the son is living on his own in the second house.


Brendan


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## Gordon Gekko (24 Jan 2018)

I agree 100%.

Revenue have no interest in circumstances where adult children reside with their parents.


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## Up Rovers (24 Jan 2018)

Gordon Gekko said:


> I agree 100%.
> 
> Revenue have no interest in circumstances where adult children reside with their parents.



Even if its two houses beside each other with parents and two adult children sharing the two houses?

Could you explain if possible please how the child can inherit the house with exemption from CAT as mentioned in this section

'If the child ultimately inherited the house, that inheritance could be eligible for
exemption from CAT under the
principal private residence exemption in section 86
CATCA 2003
once the conditions governing the relief were satisfied.'

Would this refer back to the old rules on the Dwelling House Exemption?

Thank you.


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## Gordon Gekko (24 Jan 2018)

No, that’s far from a plain vanilla scenario; Revenue would be interested in that.

If a child lives with a parent and inherits the house, the Dwelling House Exemption should be availed of.


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## Up Rovers (24 Jan 2018)

Gordon Gekko said:


> No, that’s far from a plain vanilla scenario; Revenue would be interested in that.



Sorry but I'm totally confused now.  So you're saying that because its two houses and 4 adults they would definitely apply taxes and as I've heard in the past we would probably find it impossible to convince them that we are not renting to others https://www.askaboutmoney.com/threa...-in-and-as-an-investment.204685/#post-1526111

Any idea what taxes would apply?



Gordon Gekko said:


> If a child lives with a parent and inherits the house, the Dwelling House Exemption should be availed of.



I've obviously misunderstood the changes in the Dwelling House Exemption as I had thought that even if the children lived in the house for 3 years before they received it as a gift or inheritance and stayed for 6 years after that they would still not get it tax free.  So it would be very important therefore that 1 child lives in each house?

*If you receive a gift of a house on or after 25 December 2016, you will be exempt from CAT if:

*

*you are a dependent relative of the person making the gift because you are: *
*permanently and totally incapacitated due to a physical or intellectual disability, and you are unable to earn a living*
*65 years or older at the date of the gift*

*the house was your main home for the previous three years*
*you do not own, have an interest or a share in any other house*
*the house is your main home for six years after you receive it. This does not apply if you are over 65.*


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## Gordon Gekko (24 Jan 2018)

If the parents and children cohabit, the Exemption can still apply to an inheritance.

The view that I gave was that adult kids in an adjacent property would be non-plain vanilla and therefore of interest to Revenue.


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## Up Rovers (24 Jan 2018)

Thanks for that Gordon, sorry if I have wrecked your head


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