Helping out a family member with buying a property

feeneyo

i plan on giving my brother around 70k to help him buy a property but want to keep my name off the deeds. will they be asking him to varify where he recieved the maoney and will "they" want to tax it as a gift?
feel free to ask a question, thanks

josip

According to http://www.revenue.ie/en/tax/cat/thresholds.html you can give your brother 30K tax free before tax is applied to the remainder of the gift.

Depending on when your brother intends to buy, you could drip feed him 5-10K by paying certain bills/holidays, small regular/irregular lodgements. Don't pay for his rent if he will apply for a mortgage. A bank would give credit for a history of being able to pay for rent.

I doubt if this is legit but I wonder could you gift another €30K to your mother and father if they are alive and they could gift it on to your brother?

If not, you and he could always have a €40K bet on the outcome of a boxing match or a 2 horse race and he'd only have to pay 10% on the remainder

feeneyo

thanks for the info j.. i think we can work something out with that..
i dont think the bet for 40k would hold up, i'm sure some f#$% will want 20% for something or other.

valleyoftheunos

You can gift your brother €3K a year tax free as a "Small Gift" after that he has €30k tax free allowance for gifts from all siblings, aunts, uncles etc. so it is possible that he has used some or all of this Allowence previously. the ballance fo the €70k after these allowances, is liable to Capital Aquisitions Tax at 33%.

there are ways to minimize this tax liability but you'll beed to seek advice from a professional Tax adviser or Solicitor. Bets and the like probably wont get by the Revenue

L1011

Bets would likely cause absolute havoc when applying for a mortage, also.

jmayo

MYOB wrote: »

Bets would likely cause absolute havoc when applying for a mortage, also.

I don't know, they seemed to have worked for our ex minister of finance/taoiseach.

josip

jmayo wrote: »

I don't know, they seemed to have worked for our ex minister of finance/taoiseach.

But he never needed a mortgage? He had a mate who bought his house for him tax free.

L1011

jmayo wrote: »

I don't know, they seemed to have worked for our ex minister of finance/taoiseach.

His house was gifted to him was it not?

D3PO

easiest thing would be to gift the 30k as outlined and then give an interest free loan for the other 40k.

as you can gift 3k per year outside the one of 30k lump you could then gift 3k every year to your brother. Which he may choose to use to pay back your interest free loan

jpd85

D3PO wrote: »

easiest thing would be to gift the 30k as outlined and then give an interest free loan for the other 40k.

as you can gift 3k per year outside the one of 30k lump you could then gift 3k every year to your brother. Which he may choose to use to pay back your interest free loan

A loan won't work if they want a mortgage. Bank will want to know it was a gift and there is no recourse on it.

But maybe revenue won't talk to the bank so tell the bank it's a gift and tell revenue it's a loan? I think professional advice could be money well spent with this amount of money/tax involved. Fair play for having that kinda cash and also helping your sibling out! Wish my siblings could have this problem for me ðŸ˜႒

Henry Ford III

D3PO wrote: »

easiest thing would be to gift the 30k as outlined and then give an interest free loan for the other 40k.

as you can gift 3k per year outside the one of 30k lump you could then gift 3k every year to your brother. Which he may choose to use to pay back your interest free loan

Interest free loan would be viewed as a gift by Revenue I'd say.

3k p.a. is also subject to CAT. All gifts are aggregagble iirc.

valleyoftheunos

Henry Ford III wrote: »

Interest free loan would be viewed as a gift by Revenue I'd say.

3k p.a. is also subject to CAT. All gifts are aggregagble iirc.

"Small gift allowance" of 3K means the first 3K of any Gift is CAT free.

josip

Does your brother need the full 70K to get in the door? If he intends getting any work done post moving in, eg kitchen etc. you could pay that for him on his behalf. At that stage the mortgage is sorted. Morally there'd be no issue since you've already paid tax on your 70K. I'm not sure if revenue would approve IF they were to find out.

Victor

josip wrote: »

According to http://www.revenue.ie/en/tax/cat/thresholds.html you can give your brother 30K tax free before tax is applied to the remainder of the gift.

Depending on when your brother intends to buy, you could drip feed him 5-10K by paying certain bills/holidays, small regular/irregular lodgements. Don't pay for his rent if he will apply for a mortgage. A bank would give credit for a history of being able to pay for rent.

I doubt if this is legit but I wonder could you gift another €30K to your mother and father if they are alive and they could gift it on to your brother?

If not, you and he could always have a €40K bet on the outcome of a boxing match or a 2 horse race and he'd only have to pay 10% on the remainder

Please don't make legally dubious suggestions like these - they could get someone into a lot of trouble.

The bank and Revenue will look at the substance of any transactions and are likely to see these as contrived.

Moderator

Pawwed Rig

Henry Ford III wrote: »

Interest free loan would be viewed as a gift by Revenue I'd say.

Yes it would but €3000 interest per annum on a €40,000 loan sounds reasonable enough so this would be the gift and thereby exempt under the small gift exemption.

Henry Ford III

Pawwed Rig wrote: »

Yes it would but €3000 interest per annum on a €40,000 loan sounds reasonable enough so this would be the gift and thereby exempt under the small gift exemption.

It does, except that the interest "payable" would be subject to income tax in the hands of it's recipient presumably?

Pawwed Rig

Hmmmmmm. I would need to look that one up but interest is usually taxable as received rather than as earned. There goes my Saturday :pac: