We all know that gifts are a sign of love and concern that a person show to another person. Have you ever thought of these gifts being taxed? Let’s have a deep look at it.
Basically people who receive gifts or inheritances are classified into three groups
Group A: The son or Daughter, step-child or foster child of the disponer
Group B: Other relatives such as Uncle, niece, nephews ,brothers, sisters etc.
Group C: Everyone else.
The limit or threshold amount that parents can give to their children is very high compared to other relations or groups. Parents can give gifts to their children or children can inherit the property or assets that their parents possessed. The revenue throughout the years have concentrated on the above factor and had put a knot to prevent the huge amount of money, act like an abusive devil. Thus the threshold amount which could be gifted or inherited is €335,000.
The gifts cannot be taxed within the threshold amount but Capital Acquisition Tax (CAT) is due on all inheritances. If someone gifted you with money or property and the disponer dies within a span of two years, the gift will be considered an inheritance and gift exemptions doesn’t apply.
Parents can gift their children €3000 per year which comes under Small Gifts and these amounts are exempted from taxes(small gift exemption) and doesn’t count with the lifetime limit of €335,000. Suppose both parents of the beneficiary are alive, both of them can gift €3000 each without bothering tax issues. If the beneficiary have a spouse, the parents can gift €3000 to both of them. All these comes under Small Gifts Exemption.
What happens if you gift you son/daughter the house ?
If the house is used as a principal private residence you are not liable for any capital acquisition tax.
But if it’s an investment property that you are gifting is liable to CGT
| Group A: €335,000 | Applies where the beneficiary is a child (including adopted child, step-child and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child. |
| Group B: €32,500 | Applies where the beneficiary is a brother, sister, niece, nephew or lineal ancestor or lineal descendant of the disponer. |
| Group C: €16,250 | Applies in all other cases. |
Inputs Shiju Mon chacko TASC Accountants
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