Gift from parents, potential CAT liability for future spouse

E

Every_blooming

Registered User
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Hi. I seem to be preoccupied with CAT recently. Soon to be married and I'll be looking to purchase a house with my spouse. My parents have indicated that they would like to gift a significant amount towards the deposit (€150k - 1st gift received by me) for which I'm extremely grateful.
My query is what are the CAT implications of the gift for my partner.. Who will be my spouse by that stage. The mortgage will be in both our names so I assume revenue will consider my partner receiving a gift of €75k?
Would I be better off putting the gift in a high yield savings account for a few years to negate the 3 year gifting on period before using it?
 
relax carry on said:
Think the 3 year period refers to gift splitting.

https://www.revenue.ie/en/gains-gifts-and-inheritance/gift-and-inheritance-tax-cat/how-do-you-calculate-cat.aspx
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For me, that link doesn't go where it ought to - it ends up at a page about how to submit a PAYE income tax return.

I'm going to try to share the link again, after manually navigating to it (although the hyperlink reads the same to me!):

How do you calculate CAT?

This page describes how to calculate CAT.
www.revenue.ie
 
I was not aware of this.

Does it apply to a husband giving a gift to his wife?

Gift splitting​

If a gift is passed on to someone in a different group within three years of when it was received it is called gift splitting. Gift splitting affects the threshold used.

  • Example
    In January 2022, a father gives €250,000 to his son. In October 2022, the son gives his daughter a house valued at €250,000.
    For tax purposes, the daughter has taken the gift from her grandfather, not from her father. The Group B threshold applies to her gift, not Group A.



 
I wasn't aware of it until stumbling across it on this site. Seems rather draconian but apparently it's an anti avoidance rule.
 
There was a tax appeal commissioner case in the last few years covering a family gift for a house. From my reading of the case it would appear the ownership % of the house should take in account the gift if the gift is only one sided. If not the gift will be deemed split evening between both parties.
 
Money transferred between spouses are not considered gifts by revenue. So a wife gifting €75K to a husband is of no interest to revenue.
 
Clamball said:
Money transferred between spouses are not considered gifts by revenue. So a wife gifting €75K to a husband is of no interest to revenue.
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That's my issue though. Under revenue gift splitting rules it seems that they'd regard the $75k as a gift directly from my parents
 
I assumed a joint mortgage application by a married couple would indicate a 50:50 ownership
 
Every_blooming said:
That's my issue though. Under revenue gift splitting rules it seems that they'd regard the $75k as a gift directly from my parents
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Ah, you’re correct, your solution seems to be best in this case. You could also ask your parents each to gift you and your spouse €3K each for the 3 years, totalling €36K and reducing the gift to €150-36K. And you could also ask them to pay for the wedding reception, reducing the gift by that amount also. This gives you and your spouse money to pay mortgage for y1-3 before you can both use the main gift.
 
Every_blooming said:
I assumed a joint mortgage application by a married couple would indicate a 50:50 ownership
Click to expand...

I would have assumed that as well. I know a few in this case and while the mortgage is joint the house is not evenly split. I will note that in the cases i know none of the couples are married.
 

There was a very recent one where a parent gave their son and Daughter in Law a gift after they were married.
It was deemed to be a gift to both of them so she got a gift from an unrelated person and had to pay CAT.
Had they structured it as a gift to him alone, no CAT would have been paid.

They appealed this but lost the appeal.
 
A situation like this is also my concern. Is there potentially the situation whereby if I receive a gift alone from my parents, park it in a savings account untouched but any sum of money I give to my future wife in the subsequent 3 years will be viewed by revenue as a "gifting on" from my parents.
 
The situation Brendan cited is the precise opposite of what you describe.
 
Does the 3 year gifting on period apply to married couples? I assume not.

If Granddad gives his son €200k and he passes it onto his son within 3 years, it's reasonable to treat that as a gift from grandad to grandson.

But if dad gives son €200k and son gives wife €100k, I would think that is ok. But I don't know.
 
That's what I'm concerned about, the relevant section in CATCA is difficult to interpret (for me anyways) and doesn't seem to exempt spouses.
 
The usual advice seems to be that parents should gift property directly to their son/daughter thus utilising their CAT parent-child threshold, and the son/daughter is then free to gift a half-share to their spouse without a tax implication.

(It's a long time since I looked at it in detail so don't solely take my word for it, but the above seems to be common practice.)
 
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