Parents to children transfers

alxmorgan

Hi,

Bit confused about inheritance/gift tax

One one hand I read

"As of 2021, the tax-free threshold for gifts from a parent to a child is €335,000 over their lifetime. Anything over this amount attracts a 33% charge. For grandparents and grandchildren, the lifetime threshold is far lower – €32,500"

On the other I also read:

" In addition to these lifetime thresholds mentioned above, anyone may receive a gift up to the value of €3,000 from any person in each calendar year without having to pay Capital Acquisitions Tax (CAT)."

Slightly confused. So maybe an example:

Parent gives child 50,000

It is first of any monies gifted to/inherited by the person. Do they pay any tax ?

Also what part does inheritance/gifts play in any Fair Deal scenarios that may occur down the line - thinking mainly about the 5 year rule here

thanks in advance.

ax530

50k from parents no tax paid or declared.

30k from grandparent declare but no tax due

Once you within a limit I think 80% make a declaration but no tax due.

Xander10

No tax in scenario outlined were a parent makes first gift to a child of €50k

First €3k covered by annual small gift exemption.

Balance of €47k uses up part of lifetime threshold of (currently) €335,000.

I'm not clear what you mean by fair deal scheme

Buddy Bubs

3k from each parent so it's up to 6k exempt

And if your clever about a 1 off gift you'd give 25k in December and 25k the following month in January and then the exemption would be 12k

Or be even cleverer and gift smaller amounts per year rather than a 1 off amount to get better usage of this

Princess Calla

https://www.boards.ie/discussion/comment/121814555#Comment_121814555

I presume, I could be wrong, they are thinking of an assets dump.

Give away all your assets a few years before the need for nursing home arises, so fair deal can't make a claim against your wealth.

I honestly don't know how that works but I'd imagine it's on case by case basis. I do know from experience that they look for all bank accounts and signed solicitor's letters etc (that was without an asset dump) so they absolutely love paperwork!

If that's not what the OP was asking, fair deal have a claim on a % of the value of your house at the time you enter into the nursing home. At time of death when house is being sold that liability will be settled out of the sale transfer funds. The balance of the funds will go into the estate, it's this balance that your threshold kicks in on not the full value of the house....so it's just another debt to be settled before inheritance is given......that's my understanding of it anyway.

alxmorgan

https://www.boards.ie/discussion/comment/121814582#Comment_121814582

Just to be clear here the reason you do Dec and then January is not due to immediate tax but due to monies counting towards lifetime threshold ?

So 50k in December means 50 - 6 counts toward threshold whereas 25 Dec 25 Jan means only 50 - 12 counts toward threshold ? thanks

alxmorgan

And ye I do mean Fair Deal scheme re nursing home

Hopefully never come to that but i know they go back 5 years for account

I assume 6k per year (2 x 3k from each parent) is exempt from Fair deal 5 year clawback ?