My parents have offered to give me a €30,000 deposit to buy an apartment. What are the tax implications of this?
A gift of €30,000 from your parents could potentially be liable to capital acquisitions tax (CAT). CAT would be payable by you, the beneficiary of the gift. A charge to CAT applies in the following circumstances:
1. The beneficiary (you) is resident or ordinarily resident in Ireland at the date of the gift; or
2. The disponer (your parents) are resident or ordinarily resident in Ireland at the date of the gift; or
3. The property in the gift is situated in Ireland.
The CAT thresholds are available, which ensure that CAT is paid only on gifts which exceed the limits prescribed. There are three different thresholds depending on the nature of the relationship between the person giving the gift and the person receiving the gift.
As of 12 October 2016, the thresholds are:
- Group A: €310,000 – Children
- Group B: €32,500 – Brothers, sisters, nieces, nephews or lineal ancestor/descendant of the disposer
- Group C: €16,250 – Applies in all other cases
CAT also applies to inheritances. The group threshold is a lifetime threshold. Prior gifts/inheritances received, on or after December 5th, 1991, within the same group threshold, are cumulated. If the consideration of the benefit falls below the specific group thresholds, it is not subject to CAT. The current CAT rate of 33 per cent is applied to cases where the threshold is exceeded.
A small gift exemption is also available. The first €3,000 of the taxable value of gifts received from any one disponer in each calendar year is exempt from tax.
A CAT return must be submitted to Revenue where the aggregate taxable value of gifts or inheritances received since December 5th,1991, exceeds 80 per cent of the relevant threshold amount. The CAT payment and return submission deadline is dependent on the valuation date of the gift.
The valuation date for the gift is the date you received it and is the date on which the market value is established. For a valuation date between January 1st and August 31st, the deadline is October 31st in that year. For a valuation date between September 1st and December31st, the deadline is October 31st in the following year.
In this scenario, the gift from your parents falls under the Group A threshold. Assuming previous gifts from your parents did not exceed €280,000, no CAT liability will arise as your total gifts/inheritances are below the threshold amount of €310,000. If previous gifts/inheritances were received, you will need to consider your payment and filing obligations.
Niamh Horgan, Tax Manager, RSM Ireland
Published in The Irish Times