Bank of mum and dad

[settlement]

I note a recent kerfuffle in the media about children being taxed if they receive interest free loan from parent.

It seems this has been kicked to touch. But I can't really get to grips with current status.

Let's say my mother loans me 40k. How do I 'prove' this is not a gift, and how do I avoid paying tax on it?

 

[NoRegretsCoyote]

How do I 'prove' this is not a gift

The main way is by repaying it

 

[Gordon Gekko]

By documenting it with a simple loan agreement.

 

[Mapara]

By documenting it with a simple loan agreement.

So who would need to be involved in the drawing up of the loan agreement, just the 2 parties or a solicitor or account, and what format or wording would need to be included..

 

[noproblem]

I note a recent kerfuffle in the media about children being taxed if they receive interest free loan from parent.

It seems this has been kicked to touch. But I can't really get to grips with current status.

Let's say my mother loans me 40k. How do I 'prove' this is not a gift, and how do I avoid paying tax on it?

What did you get the "gift loan" for? After answering that, you'll have a paper trail to prove it. Then, you'll pay it back which will have another paper trail. There's no "Bertie 2" allowed.

 

[settlement]

By documenting it with a simple loan agreement.

Are legal personnel necessary?

 

[Jim2007]

Are legal personnel necessary?

It depends on whether your knowledge is sufficient to draft a loan agreement... most people probably don't have sufficient knowledge to draft a document that would be acceptable to the Revenue.

 

[RedOnion]

Are legal personnel necessary?

No, not for tax purposes.
You open a new word document. Write the details of the loan and when it's to be repaid. Both parties sign it. Then you evidence that the repayments have been made, e.g. records of bank transfers.
Nobody will question a 40k loan between family members.

 

[Gordon Gekko]

There’s no need for lawyers for a simple loan within a family.

 

[roker]

What is the max that can be given before it's taxable

 

[Brian McD]

I’m going the other way, giving loan of €200k to the parents to help them repay some maturing debt. Loan agreement drawn up, interest rate on loan is currently zero as you’d get zero if you put €200k on deposit with BOI / AIB. Monthly loan repayments in place.

 

[Sarn]

I see that RTE has an article on this:

Is the Bank of Mum & Dad still in line for a tax hit?

 

[noproblem]

They're putting it out there to see what negative reaction there might be. Depending on what results from such intellectual research , they'll act, or not. Would Paschal and the Goverment do this? Bet your bloody life they would.
Unless of course they say that it's a revenue matter and nothing to do with party politics/Goverment.