If so, you need to be aware of the possible gift tax implications that may arise.
Can I give my children gifts without paying tax?
Yes, but there is a lifetime limit of €400,000 that each child can gift or inherit tax free. In addition to the above, each child can receive €3,000 per annum from each parent without affecting their lifetime limit.
I have been paying college fees and accommodation for our child, does this reduce the lifetime tax free amount of €400,000?
No. Payment for education and costs of living including accommodation are not deemed a gift for gift tax purposes. The principal condition is that the child must be between the age of 18 and 25 and be receiving full time education at a school, university, etc and the course must be for not less than two years.
My spouse and I purchased an investment property, and now want to let it rent free to our child while they are at university, is this liable to gift tax?
No, provided your child is at university and meets the necessary requirements, they will not be liable to gift tax. However, if you continue to let your child remain in the property rent free after university, this amount will then be considered a gift and will eat into their tax-free limits.
Are there any additional gifts or benefits I can give to my child without leaving them liable to CAT?
Revenue also allow family functions to be paid for by somebody else, without the costs being classed as a gift. For example, a wedding can be paid for by the parents and this will not be considered a gift. However, any gifts that are additional to the cost of the wedding may not be allowable, e.g. if the honeymoon would be classed as a gift and if it exceeded the annual exemption of €3,000, the balance may be taxable or reduce the lifetime tax free amount of the child.
We would like to buy our child a residential property. Can they avoid paying gift taxes if we do so?
If the property value is in excess of €400,000 then tax of 33% of the excess will be payable by the child. You could however utilise the small gift exemption so that both you and your spouse put €3,000 each per annum into an account for your child as a contribution towards the deposit without any gift tax arising.
