Gift tax query

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Browneyedgirl4

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If a parent wants to give 75k cash to a son for home improvements in one lump sum is it liable for gift tax.? If it does could the parent pay the builder directly for the works done and not incur any tax….or is there any other way around it other than giving 3k per year ?
 
Browneyedgirl4 said:
If a parent wants to give 75k cash to a son for home improvements in one lump sum is it liable for gift tax.? If it does could the parent pay the builder directly for the works done and not incur any tax….or is there any other way around it other than giving 3k per year ?
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That would be tax evasion (paying the builder).

There’s a €335,000 ‘Parent/Child’ tax-free threshold.

Two parents can gift €6,000 to their son, and if there’s a daughter-in-law or partner in the mix, that could be upped to €12,000, obviously.

Or the money could be loaned to the son (and daughter-in-law if relevant). Then write-off €6k/€12k each year, so the threshold is protected.

There is a deemed tax cost of a free loan, but it’s the call deposit rate for the cash, which is still low.
 
Sorry excuse my ignorance ….if the money is loaned by one parent (widow) how is 3k written off by the child…
 
Browneyedgirl4 said:
Sorry excuse my ignorance ….if the money is loaned by one parent (widow) how is 3k written off by the child…
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No problem at all.

Lend €75,000, write-up a simple loan agreement, and then write-off €3,000 a year of the loan balance.

(€3,000 minus the deposit interest the parent could get).

None of this is necessary if the €335,000 threshold will never be used.
 
Thanks and one last question as it’s a bit confusing…..it seems that giving a loan rather than a gift is better…if the threshold is never intended to be reached later on..and the parent doesn’t expect repayment of the loan ..say 100k is loaned and the deposit int is 1k per annum that the parent would expect to get on deposit …is the child expected to,pay back 1k each year to the parent for 100 years …does the child have to fill out a tax return annually…
 
Correct.

Although, if the threshold will never be reached, the loan isn’t really needed, you’d just gift it all and move on.
 
No.

Gift Tax returns are an IT38, but an obligation to submit one only triggers when the value hits 80% of the threshold (so 80% of €335,000).
 
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