# Tax implications on paying parents mortage



## Billy Elliot (27 Jul 2012)

Hi,

As a teenager my parents remortgaged their home to pay for some very expensive education/training. We took this decision on the basis that I would pay it back monthly as I started to earn. I have been paying this back over the last few years. 

I am now in the possession of a lump sum and having no other debt I'd like to start aggressively paying off my debt with the lump sum and increasing the monthly amount.

Is there anything I need to be careful with in terms of say shifting €30,000 into my parents mortgage?  Are there tax liabilities? Should I transfer in smaller amounts to avoid suspicions? I can of course prove where the money came from and that it is bonafide.


----------



## mf1 (27 Jul 2012)

You are just repaying a loan. Give them the money. 

There may be Money Laundering issues - but you say you've nothing to hide. 

Who's suspicions do you want to avoid? 

mf


----------



## Billy Elliot (27 Jul 2012)

*Mf1*

Genuinely have nothing to hide. I have just never been in a position before where I have been making a €30,000 transfer and would rather not have to deal with the revenue and any audits if I could avoid it by making 3 x €10,000 transfers. I was lead to believe that there was a reporting threshold of €13,000 per lodgement.

I am also totally ignorant if there could be a tax liability as it is NOT my mortgage, it is in my parents names. So technically I am paying someone elses loan. I just wanted to check how that works.


----------



## Setanta12 (28 Jul 2012)

Billy Elliot said:


> *Mf1*So technically I am paying someone elses loan.



Technically - you're not. What your parents choose to do with the amount you pay back is up to them.  If they ask you to direct your repayments to them to someone else (i.e. the bank), you're still discharging your obligation to your parents.


----------



## wbbs (28 Jul 2012)

Technically you are just giving them a gift and it is below the tax threshold for child to parent so it's fine.


----------



## Brendan Burgess (28 Jul 2012)

wbbs said:


> Technically you are just giving them a gift and it is below the tax threshold for child to parent so it's fine.



You are not giving them a gift.

As MF1 pointed out, you are simply repaying a loan and it has no tax implications whatsoever.  

Just pay it into your parents' bank account and let them pay off their mortgage or do whatever they want with it. 

It is very unlikely that a payment from a child to a parent would trigger any sort of audit.  An if it did so what?  It's a hassle, but a very minor hassle as you are tax compliant and you can show the source of the funds.

Brendan


----------



## wbbs (28 Jul 2012)

Interesting, my brother paid off my father's mortgage, an amount below the figure being talked about here, and the solicitor said it would be considered a gift for tax purposes.  

If for example, a random stranger decided to pay off my mortgage, would this have no impact tax wise on either of us?


----------



## PaddyBloggit (28 Jul 2012)

The random stranger wouldn't be paying back a loan to you as is in the case of the OP so there should be tax implications.


----------



## wbbs (28 Jul 2012)

I thought the OP meant his parents remortgaged the house with presumably a financial institution (to fund his education) and that he now wished to start clearing that mortgage.  As I understood it the mortgage is in their names not his but he now wants to pay a lump sum of 30k towards it.  

Other than it is parent and child how would that be different tax wise to the random stranger we'll say lodging 30k to my mortgage?   Maybe it's not a random stranger for arguments sake, let's say I increased my mortgage by 30k to give to my neighbour for some odd reason but without any corresponding paperwork with my neighbour's name on it what proves when my neighbour hands me back 30k that it is not a gift if the loan was in my name all along.  I'm puzzled now?


----------



## Brendan Burgess (28 Jul 2012)

I think that it is extremely unlikely that the Revenue would query a transaction such as this between son and parents.

If they do, he could show that they paid for his education which was, in effect, a loan. 

If I gave a random stranger €30,000, the Revenue would query it. 

Brendan


----------



## Billy Elliot (10 Aug 2012)

Thanks for the replies. I've started transferring the money. My bank has a daily €5K limit anyway. If I do hear anything from the revenue I'll be sure to let you know.


----------



## Bronte (14 Aug 2012)

Well done Billy Elliot in getting your education, getting a good job and being honourable to your parents. They must be very proud of you.


----------



## Billy Elliot (7 Oct 2012)

I've transfered the money and it's all quiet so far. It was also very satisfying to see the loan duration tumble and to see the amount of money saved in interest over the long term.


----------



## WizardDr (29 Oct 2012)

@Billy Elliot - you give the sleuths in Revenue a lot of credit that they do not deserve.

They are 'lookback' merchants which means they sit on the fence for years and the create a situation. 

Just look at the b/s on Non Resident Accounts. A scandal of Revenue doing nothing.


----------

