Loan to Child

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Eithneangela

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If a parent lends a child funds to purchase a house and the child pays back the loan on a regular basis, are there any tax implications?
 
If the parent charges interest then the interest is subject to Income Tax.

If the parent does not charge interest then there is a deemed gift of the interest to the child. The annual small gift exemption should cover the gift so no tax due.
 
Joe_90 said:
If the parent charges interest then the interest is subject to Income Tax.

If the parent does not charge interest then there is a deemed gift of the interest to the child. The annual small gift exemption should cover the gift so no tax due.
Click to expand...
Thank you. If the loan is the price of a house (maybe €150K) and in the current climate of European Interest rates at .05% would the inheritance laws allow this? Child would not be able to pay even current tracker rate on this type of loan but parent really wants to legally help.
 
Hi Eithne

Some wealthy parents are buying a house.
They allow their child to live in it rent free.
After 3 years , they gift the house to the child .
A gift of a house is exempt from CAT ( Check the terms and conditions)
The parent pays CGT on any increase in the value of the house during the three years.

The parent child exemption from CAT remains intact

Brendan
 
Brendan Burgess said:
Hi Eithne

Some wealthy parents are buying a house.
They allow their child to live in it rent free.
After 3 years , they gift the house to the child .
A gift of a house is exempt from CAT ( Check the terms and conditions)
The parent pays CGT on any increase in the value of the house during the three years.

The parent child exemption from CAT remains intact

Brendan
Click to expand...
Many thanks for that, Brendan. I assume that the gift forms part of the inheritance limits from parent to child?
 
Joe_90 said:
If the parent does not charge interest then there is a deemed gift of the interest to the child. The annual small gift exemption should cover the gift so no tax due.
Click to expand...

What is the limit for the annual small gift exemption?
 
clueless said:
What is the limit for the annual small gift exemption?
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A beneficiary can receive up to 3k from any one donor in a year. So if that would be 6k if your parents jointly gift you money or money's worth.
 
If it's a loan it's not a gift. Do they still pay tax on i? Somehow I had in my head that the figure would be about 10,000. Don't know where I got that number.
 
clueless said:
If it's a loan it's not a gift. Do they still pay tax on i?
Click to expand...

Already addressed...

Joe_90 said:
If the parent charges interest then the interest is subject to Income Tax.

If the parent does not charge interest then there is a deemed gift of the interest to the child. The annual small gift exemption should cover the gift so no tax due.
Click to expand...
 
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