Is capital gains tax due on disposal of money gift from parent

G

goodsaysir

Registered User
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Wishing everybody a great evening hoping for some advice..

If I received gift from example parent

Example 100,000 euro

And I used the money that was a gift to pay off debt, would there be capital gains tax?

The reason I’m asking is because I got this money for “free” under 400,000 cat treshold

And I’m gaining by paying off debt

Thanks - gds
 
CGT is payable if you make a gain from seliing an asset.

You are confusing CAT and CGT.

There is no CGT issue here.

How could there be CGT, if there is no capital gain made?
 
You are confusing Capital Gains Tax (CGT) and Gift/Inheritance Tax (CAT)

CGT is due when you dispose of an asset - if you made a gain, then tax is due. If you made a loss then a tax credit can be carried forward and used to offset future gains

CAT is due on gifts & inheritances - the tax-free threshold for gifts/inheritances from parents to a child is € 400,000. This is a lifetime allowance and includes all gifts/inheritances received since Dec 1991

So if this is the only gift you have received from your parents, then it is below the threshold and no tax is due

Your parents may have a CGT liability depending on the source of the funds they gift you
 
Thanks,

So I am not making a gain if I dispose of the gift (100,000 euro) to pay debt? Even when I got it for free as a gift?


Thanks for help sorry for being repetitive want to be sure
 
What you do with the gift you receive has no tax implications

You can pay off a loan, buy a new car, go on holiday, etc etc

It's your money to do what you like with it

You do not "dispose" of cash, you spend it
 
You can only make a gain by disposing of an asset.

For this purpose, euros are not an asset.

(Foreign currency can be an asset. Lets say your parents gift you US$100,00 and, at the time of the gift, that's worth €95,000. You leave it sitting in a US$ bank account for a while but then, some months later, you convert it to euros. The dollar has risen against the euro in those months and, on conversion, US$100,000 gets you €105,000. You've made a gain of €10,000.)
 
Thanks for help everyone

And one last thing

Can I receive a gift of 100,000 euro off a parent tax free this year? as I never received a gift before

And this would bring my lifetime treshold to 300,000 remaining?
 
goodsaysir said:
Can I receive a gift of 100,000 euro off a parent tax free this year? as I never received a gift before

And this would bring my lifetime treshold to 300,000 remaining?
Click to expand...
Yes.

It might also be possible to use the small gift exemption to reduce the "erosion" of your lifetime group A exemption threshold by up to €12K (i.e. €3K from each parent in late 2024 and again in early 2025) leaving you with €312,000 remaining.

Small Gift Exemption

Exemption from CAT on small gifts
www.revenue.ie
 
Why exactly do you think that a capital gain arises in such circumstances?
I suspect that you're overthinking this to be honest.
 
Reactions: jpd
Okay thanks, and to be sure

Can a parent gift son money at any stage of his life, not just inheritance on death

Very last question thanks clubman you’re the best
 
Anybody can make a gift to anybody else at any stage.

The issue is that the recipient may have to pay CAT.

Whether or not the recipient has to pay CAT depends on the relationship between the donor and the recipient.

A child can receive up to 400k free of CAT from parents, that is a lifetime amount.
 
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