Paying off someone elses mortgage

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monkeyboy

Registered User
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Hi

My bro owns an apartment of which I am guarantor as he is a student. My parents wish to pay off his loan so as to be rid of the interest element of his costs so as to help him through college.

What are the implications to this?
 
From Revenue, your parents can gift him [broken link removed] with no tax implications (unless previous large cash gifts have been made). When he is gifted this money he may then do with it as he wishes (clear off the mortgage). [your parents and brother can then organise any repayment methods they wish without the interest on the current loan or whatever situation they wish to set up]

Any amount over and above threshold would be taxed at 20% (*threshold the combination of all aggregable benefits recieved from parents) .
 
can gifts be given on several occasions to a total value of that or is it a once of and the max should be taken advantage of whre possble?

cheers
 
Is it not €478,155 is the threshold from your parents as a group, rather than them individually?
 
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Are you sure it's 475K from each parent?? I always thought it was 478K approx. What happens if one of you dies first and spouse inherits? In that case the sole survivor could only pass on 478K??
 
monkeyboy said:
can gifts be given on several occasions to a total value of that or is it a once of and the max should be taken advantage of whre possble?

cheers
Click to expand...

Yes that's right it can be given in drib and drabs...much nicer in a lump though! ;)
 
liteweight said:
Are you sure it's 475K from each parent?? I always thought it was 478K approx. What happens if one of you dies first and spouse inherits? In that case the sole survivor could only pass on 478K??
Click to expand...

The exact figure is [broken link removed] as listed above, €475k was just used as an easier figure for me to double up with (€956310 vs. €950k).

Looking through the paperwork on CAT I saw nothing to say it's a combination of both parents. The form requests the PPS number of the doner and the relationship, but doesn't mention accumilative figures from both parents.

However, a little digging seems to agree with your thoughts on the matter. It's a combined payment from everyone within that bracket.
"When calculating CAT prior gifts or inheritances received from a person within the same class threshold (since 5 December 1991) are aggregated with the current benefit. CAT is paid on the excess (if any) of the value of the current benefit over the class threshold after taking any aggregable prior benefits into account."
Click to expand...
 
Can this also apply back the way...ie. can I gift my brother and I, my parents similarly?
 
monkeyboy said:
Can this also apply back the way...ie. can I gift my brother and I, my parents similarly?
Click to expand...

You can gift your brother €47815 (+3k small gift exemption) tax free.
You can also gift your parents that amount tax free.

Check through the links above and you will see that should your parents gift you €50k, and you gift your brother €50 shortly after, (unless proof can be made that the two were unconnected) it'd be taxed as your parents giving your brother the €50k (potentially putting it over the threshold and encurring tax liability - in other words, they watch for tax evasion!).
 
Thanks, I was not planning anything illegal. BUt those exemptions are there to be used to their fullest. God knows we pay enough stealth taxes on top of the rest.

cheers.
 
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