I’m selling my house to give my son, his fiancée and two grandchildren who are living in a one-bed apartment a deposit of €45,000 to get their own house. Will they be liable for gift tax?
Ms S.D., email
If ever you needed proof of just how family-focused Irish people are, this is it – a grandmother selling up so that she can release equity to fund a deposit for her son and his partner to buy a home for their family.
For those whose parents can afford it, the bank of mum and dad is becoming increasingly important for a whole generation of young (and not so young) people who cannot get a toehold on the housing ladder in a world where land is pushing up the price for homes – especially in Dublin – and Central Bank rules are putting a cap on mortgage lending. But I still haven't come across too many people willing to sell up their own home to fund their children's purchase.
In a world where our friends and social reference points are local to an area and where trading down can be difficult for simple reasons of availability, it is a brave move.
And, of course, the last thing you’d want is for it all to be undermined by a tax bill.
Depending on how you do this – and on what each of your son and his partner might have previously received by way of gifts or inheritances – there should be no tax bill.
The easiest way,in practical terms, is to gift the money to your son only. This is not to snub his fiancée but simply to recognise reality. Your son can receive up to €335,000 from his parents without having to worry about tax.
Given the predicament, I am assuming he has not already inherited or been gifted substantial sums from his father or yourself, so he would have no tax bill.
His fiancée is not a blood relative of yours. As such, in law, she can receive only €16,250 from anyone who is not a blood relative. Even if she has received nothing from anyone else, half of the €45,000 gift from you would, in itself, put her over the threshold and she would be paying tax on the difference between her €22,500 share and the €16,250 threshold. At 33 per cent of that difference – €6,250 – the tax bill would be €2,083 and that could be the difference between having the deposit they need or falling short.
As this is your family home, you would have no tax implications yourself.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
