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Gift for purchasing a house, to have pay Tax?

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  • 18-06-2021 10:53pm
    #1
    Henry Ngo
    Registered Users Posts: 29 ✭


    Hi guys.

    I have one question and need your advice. I am in process of buying a house in Dublin. My father who is living in Vietnam will transfer money for me as gift about €80,000. The gift will be combined to the mortgage to buy the house.
    As I know the law is it will not pay any tax because the gift amount is below 335K Eur and it is applied for Irish citizens.
    But for my case, I am not Irish citizen and my parents from another country will transfer money for me as a gift. So will I not pay tax for it? Is this rule also applied for my case?

    Thanks you in advance guys


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    #2
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Short answer - it's complex!
    • Are you resident for tax in Ireland?
    • Are you living here a long time and/or intend to stay indefinitely?
    • Is your father resident for tax purposes in Vietnam?

    A quick search found this which may help.

    Basically, if you are only resident in Ireland for short term, then gift tax/CAT doesn't apply to you, otherwise, you are in scope. However, the fact that you are buying a house would definitely give the impression you are staying in Ireland long term!

    If you are applicable for gift tax/CAT (which I assume you are), while you will not need to pay tax on it in Ireland as it is well below the CAT threshold (assuming you have not received sizeable gifts before in Ireland), it will eat into that lifetime threshold (for example, if you expect sizeable gifts/inheritance in the future that will bring you over the threshold, then you will have to pay tax on the amount in excess of the threshold)

    The flip side is that there may also be tax implications in Vietnam.

    You may need to speak to an accountant if you want to get certain advice.


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    #3
    Henry Ngo
    Registered Users Posts: 29 ✭Henry Ngo


    Thanks Dotmans your comments. About your unsures:


    Are you resident for tax in Ireland?

    ==> Yes



    Are you living here a long time and/or intend to stay indefinitely?

    ==> Yes, I have Stamp 4 in Ireland. I will stay indefinitely in Ireland.



    Is your father resident for tax purposes in Vietnam?
    ==> Yes.

    Assuming you have not received sizeable gifts before in Ireland.
    ==> I have not received any gifts before in Ireland.


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    #4
    dotsman
    Registered Users Posts: 3,636 ✭✭✭dotsman


    Then you don't need to pay tax (in Ireland). However, my interpretation is that you will still need to declare it and it will come out of you lifetime threshold.


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    #5
    CalisGirl
    Registered Users Posts: 76 ✭✭CalisGirl


    dotsman wrote: »
    Then you don't need to pay tax (in Ireland). However, my interpretation is that you will still need to declare it and it will come out of you lifetime threshold.

    Although the gift should come out of your lifetime threshold, you don't need to declare the gift until you have received at least 80% of the €335k threshold. When you have received 80% or more of €335k , you will need to file a tax return. https://www.revenue.ie/en/gains-gifts-and-inheritance/completing-your-gift-or-inheritance-tax-return-it38/how-do-you-know-if-you-should-file.aspx

    Also, for Cat purposes, the gift is valued at €77k due to Small Gift Exemption. Essentially, the first €3,000 of the total value of all gifts taken from any one disponer (i.e. your father )within a calendar year is exempt from CAT. Might be worth considering if €3k of the gift could come from your mother as that would also be exempt from Cat and not included as part of the €335k threshold.


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    #6
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    Out of curiousity, at what point would this issue arise?

    As far as I am aware you can only gift 3k per year to children, but I know lots of people that have gotten bigger gifts off their parents. None of them ever mentioned the tax man, though. I presume as part of buying the house it isn't an issue or concern for the bank? but its on you if Revenue ever come calling for a random look and notice it?


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    #7
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    Deleted User wrote: »
    Out of curiousity, at what point would this issue arise?

    As far as I am aware you can only gift 3k per year to children, but I know lots of people that have gotten bigger gifts off their parents. None of them ever mentioned the tax man, though. I presume as part of buying the house it isn't an issue or concern for the bank? but its on you if Revenue ever come calling for a random look and notice it?

    Tax on gifts is covered by Capital Acquisitions Tax (CAT). Under CAT rules you can receive a gift from anyone of 3k or less in any year, and its not an issue. After that, there are 3 categories of relationship you can have with a person giving you a gift. In each category, you get a lifetime allowance you can receive tax free - anything above this lifetime allowance is subject to CAT. The point at which the gift becomes subject to CAT depends on what your relationship is to the person giving you the gift, and what other gifts/inheritances you have received in the past.

    In this case its a gift from a parent, and your lifetime allowance in that category of relationship is about 330k, so assuming they OP had not received other gifts in that category, then its OK to receive the 80k gift now with no CAT to pay. If the gift was coming from a non-relation, that category has a lifetime limit of about 16k, so CAT would have to be paid.


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    #8
    [Deleted User]
    Posts: 14,344 ✭✭✭✭ [Deleted User]


    DubCount wrote: »
    Tax on gifts is covered by Capital Acquisitions Tax (CAT). Under CAT rules you can receive a gift from anyone of 3k or less in any year, and its not an issue. After that, there are 3 categories of relationship you can have with a person giving you a gift. In each category, you get a lifetime allowance you can receive tax free - anything above this lifetime allowance is subject to CAT. The point at which the gift becomes subject to CAT depends on what your relationship is to the person giving you the gift, and what other gifts/inheritances you have received in the past.

    In this case its a gift from a parent, and your lifetime allowance in that category of relationship is about 330k, so assuming they OP had not received other gifts in that category, then its OK to receive the 80k gift now with no CAT to pay. If the gift was coming from a non-relation, that category has a lifetime limit of about 16k, so CAT would have to be paid.




    I understand the rules, but what I'm saying is, in practice, at what point would it become an issue in applying for a mortgage? Will the bank want to see that you've paid CAT on any amount that's gifted to you? or that you are below a gift threshold etc.?


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    #9
    Ace2007
    Registered Users Posts: 19,705 ✭✭✭✭Ace2007


    Deleted User wrote: »
    I understand the rules, but what I'm saying is, in practice, at what point would it become an issue in applying for a mortgage? Will the bank want to see that you've paid CAT on any amount that's gifted to you? or that you are below a gift threshold etc.?

    Bank don't care, but revenue will - and if revenue find out and you can't pay - well there is interest and fines and they aren't small.

    The bank will ask the person gifting the monies to you to sign a document, which states something along the lines of "I confirm that any tax implication of the gift has been satisfied"


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    #10
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Ace2007 wrote: »
    Bank don't care, but revenue will - and if revenue find out and you can't pay - well there is interest and fines and they aren't small.

    The bank will ask the person gifting the monies to you to sign a document, which states something along the lines of "I confirm that any tax implication of the gift has been satisfied"

    I think the solicitors involved in the sale will also want that cleared up / formalized. I sold a house a few years back to a friend at a discount and I very much remember formalizing the gift, in terms of having to sign a few forms for his bank and solicitor. I believe they had to pay the tax due before the sale proceeded to the last step, or it was added to the mortgage I can't quite remember.


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    #11
    cruizer101
    Registered Users Posts: 3,205 ✭✭✭cruizer101


    Ace2007 wrote: »
    The bank will ask the person gifting the monies to you to sign a document, which states something along the lines of "I confirm that any tax implication of the gift has been satisfied"

    The Bank doesn't even look for that.
    All they want is a letter that states it is a gift and that the person will have no interest in the property.
    https://www.ulsterbankintermediaries.ie/support/supporting-documents


    I am curious myself do revenue keep a record of any large transactions reported by the bank?
    E.g. say someone gets a gift of 30k towards a house purchase, that transaction as I understand gets reported to revenue, do the details of where it came from get recorded.

    Lets say it was from a grandparent so under that threshold.
    Than later in life parents pass away and you inherit 330k, do revenue know the previous 30k wasn't from your parents and so no tax is due.
    Do they just have records of amounts received by you and you should have proof of where it came from?

    It won't ever be a problem for me but I am curious about what the details of what they keep on record are.


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    #12
    Ace2007
    Registered Users Posts: 19,705 ✭✭✭✭Ace2007


    cruizer101 wrote: »
    The Bank doesn't even look for that.
    All they want is a letter that states it is a gift and that the person will have no interest in the property.
    https://www.ulsterbankintermediaries.ie/support/supporting-documents.

    It was on the gift letter form that aib provided me with so some banks are different


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