# Paying my son's deposit on home



## Honey Bee (11 Feb 2013)

I wish to help my son out as he is about to purchase a new home. However, he does not have the deposit and I am hoping to lend him around €25,000, towards the deposit and doing the house up. He will be paying me back this amount over the coming years interest free. Will I be liable for any tax on the sum he is repaying me, bearing in mind that I will not be charging interest or making any profit.


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## 44brendan (11 Feb 2013)

No, even if the amount is made as a gift rather than a loan, it is well under the threshold that would be liable to CAT.


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## mandelbrot (11 Feb 2013)

cashier said:


> Hi Honey Bee
> 
> I do not think it is a good idea to be giving your son a deposit to buy a house, it would be a much wiser decision for him to make some attempt at saving for the deposit himself. Purchasing a house is one of the biggest financial outlays a person will make in their lifetime and saving for the deposit is all part of that process. It teaches discipline and prudence and they appreciate their new home all the more seeing they worked hard to achieve the dream.


 
Your point may be valid, but I don't think the OP asked for a lecture from you about the rights and wrongs of the making of the loan - and without knowing all of the circumstances of the parties it's hardly fair to be pontificating to them (for all you know the son might have been out of work and had his savings dwindle, or only recently have started earning sufficiently to start saving towards a deposit).



44brendan said:


> No, even if the amount is made as a gift rather than a loan, it is well under the threshold that would be liable to CAT.


 
+1


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## David_Dublin (11 Feb 2013)

cashier said:


> Hi Honey Bee
> 
> I do not think it is a good idea to be giving your son a deposit to buy a house, it would be a much wiser decision for him to make some attempt at saving for the deposit himself. Purchasing a house is one of the biggest financial outlays a person will make in their lifetime and saving for the deposit is all part of that process. It teaches discipline and prudence and they appreciate their new home all the more seeing they worked hard to achieve the dream.



Good lord, what a response. How is it up there on that horse?


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## callybags (11 Feb 2013)

Is the OP's son liable to tax on notional income for receiving the loan tax free? A sort of BIK.

Or am I imagining something that is not there at all?


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## Joe_90 (11 Feb 2013)

callybags said:


> Is the OP's son liable to tax on notional income for receiving the loan tax free? A sort of BIK.
> 
> Or am I imagining something that is not there at all?



One of those I know I remember something but can't remember what, moments.

There is a deemed gift for the free use of property, in this case free use if money - an interest free loan.  With the annual exemption of €3k per annum and the parent to child threshold, there would be no tax due but it would eat into the threshold over time.


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## Bateman (11 Feb 2013)

It's unlikely to eat into the threshold.

The small gift exemption of €3,000 should cover the deemed interest.


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## Bronte (12 Feb 2013)

David_Dublin said:


> Good lord, what a response. How is it up there on that horse?


 
I agree with Cashier.


OP as it's a loan with zero interest there will be no tax.


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## Honey Bee (13 Feb 2013)

Thank you all for relevant responses. Yes, indeed I only asked advice on my position regarding tax on repayment of this loan. I'm explaining in brief my situation because responses should be kept in keeping with the question.

My son has a very rare, treatable but incurable disease. He had five major operations and was very close to loosing his life. He has lost 80% of his colon. Despite this he eventually managed to start his own business and is now hopefully in a position to purchase a house. He has worked so hard and under terrible circumstances to reach this point. Nothing came easy to him and I'm priviliged to be in a position to help him out. 

From reading your replies I think it is fine for me to proceed with the interest free loan to him without any tax implications. Thanks again.


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## Bronte (13 Feb 2013)

Thank you for the info Honey Bee, in your circumstances it makes perfect sense to pay the deposit. 

Just in case it's not a 'loan' make sure he proves he's paying you back, maybe a direct debit would be a good idea from him to you that will be a record going forward.


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## SparkRite (13 Feb 2013)

mandelbrot said:


> Your point may be valid, but I don't think the OP asked for a lecture from you about the rights and wrongs of the making of the loan - and without knowing all of the circumstances of the parties it's hardly fair to be pontificating to them (for all you know the son might have been out of work and had his savings dwindle, or only recently have started earning sufficiently to start saving towards a deposit).



Here Here or is it Hear Hear!

Either way well said Mandelbrot.


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## becky (13 Feb 2013)

I have no problem with a parent giving a gift/loan but he will need to demonstrate that he can cover the loan/gift plus mortgage.


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## Honey Bee (14 Feb 2013)

cashier said:


> Apologies for my response to your question. There have been past threads on here with people giving their children loans and even going guarantee with the loan and often it does not work out very well.
> 
> I wish your son well, he sounds like a terrific man.


 

Thank you, I appreciate you coming back to me. Yes he is quite a remarkable young man.


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## Honey Bee (14 Feb 2013)

mandelbrot said:


> Your point may be valid, but I don't think the OP asked for a lecture from you about the rights and wrongs of the making of the loan - and without knowing all of the circumstances of the parties it's hardly fair to be pontificating to them (for all you know the son might have been out of work and had his savings dwindle, or only recently have started earning sufficiently to start saving towards a deposit).
> 
> 
> 
> +1


 
I'm sort of everywhere with my replies but I'm not really used to this website! Anyhow, thank you so much for reading between the lines of my original question. All has now been made clear and I appreciate your considerate response. Thanks again.


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## Bronte (14 Feb 2013)

cashier said:


> Apologies for my response to your question. There have been past threads on here with people giving their children loans and even going guarantee with the loan and often it does not work out very well.
> 
> .


 
In the particular circumstances of Honey Bees case, which were not originally outlined, your post is still valid.  AAM is about giving the best financial advice, as many of us have discovered not everyone tells the full facts and we can only go on what is posted.  But the posts and threads on here are for everybody and if the Celtic Tiger taught us anything and as AAM'ers have discovered a lot of people were too generous in giving their kids money to get a foothold on a ladder that has led to financial armageddon.  

As we now know your advice does not apply to Honey Bee but it still applies to the vast majority of cases.  

___________________

Honey Bee -  it's good to know you you've gotton the advice you sought.  Best of luck to you and your son.


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## David_Dublin (14 Feb 2013)

People seem still not to understand the point here - you answer the question asked, you dont stick your oar in and muse on things you dont have the facts about. A follow-up response suggests this will continue though, e.g. "Thank you for the info Honey Bee, in your circumstances it makes perfect sense to pay the deposit." - just to reiterate -the OP didn't ask should he do this, or for moral/economic or any other guidance, they were quite specific in asking about tax implications.

So, in my humble opinion, if you can help the OP with what they are looking for then post. If you have something off topic or whatever, its not very helpful.

Best of luck to the OP and his son.


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## ANORAKPHOBIA (14 Feb 2013)

It seems there are a few people on this site that cannot resist giving moral direction to contributers whether they ask for it or not. I think we all know who the worst offenders are.


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## mf1 (15 Feb 2013)

Perhaps an objective comment? 

It would be worse than useless if, any time a poster posted a specific query, without any background, contextual and grounding information,  any helpful, unpaid, expert, voluntary, giving their own time and expertise - tick as appropriate - replying poster did not, at the very least, ask some very specific circumstantial questions to ascertain  the overall position. 

So - if Honey Bee had, for example, said: Oh by the way, to put this in some sort of context, here are some salient facts..........Oh and I do completely get the risk of losing the money........

That would have changed the responses. 

And, perhaps, if the reply from cashier had included words like: there may, of course, be all kinds of extenuating circumstances........can only go on problems that other posters have encountered etc.,etc.

It would have sounded less harsh. But the points made were valid and sensible.  

Now, moving along............

Answering the question asked - a good advisor would not do so without getting an overall perspective. People on this site are giving of their time and experience freely and willingly so, to suggest that only the question asked should be answered, is a little bit naive. 

"Moral direction?" "We know who the worst offenders are? "

Ah now!

mf


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## mandelbrot (15 Feb 2013)

mf1 said:


> Perhaps an objective comment?
> 
> It would be worse than useless if, any time a poster posted a specific query, without any background, contextual and grounding information, any helpful, unpaid, expert, voluntary, giving their own time and expertise - tick as appropriate - replying poster did not, at the very least, ask some very specific circumstantial questions to ascertain the overall position.
> 
> ...


 
Sorry MF I'm just not buying it in this case - the OP asked a very straightforward and specific question about their tax exposure on the making of an interest free loan to a child - in fact if they had actually given LESS information Cashier would have had less scope to get up on the proverbial burger-yielding quadruped.

In this instance it was a simple question with a simple answer.


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## mf1 (15 Feb 2013)

Original Poster - New  Poster 

No context. 

I'm happy to agree to disagree with you on this one. 

mf


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## Honey Bee (15 Feb 2013)

Reading down through new responses I feel it is not possible nor feasible for posters to give a full life history behind their query.

I tried to keep my query as concise as possible initially without having to explain myself and give family background.

I'm quite aware of the fact that children can fail to repay loans to their parents. This was not my question. If I'd a problem in this area I would have asked advise.

My query was in relation to tax implications and should, as other people stated, have been answered accordingly.

To those who did give me the tax advise I enquired about I once again thank.


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## DrMoriarty (15 Feb 2013)

As the OP's question has been answered I'm going to close this thread, before a Friday "flame" breaks out.


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