It's not just the Bank of Mum and Dad giving househunters a leg up on the property market – it's the Bank of Granny and Granddad.
Financial advisers, estate planners and tax experts have told the Sunday Independent that grandparents, worried about the effects of the housing crisis on their grandchildren, are increasingly using their wealth to build up a pot of money to get their grandkids onto the property ladder.
David Quinn, managing director of Investwise, said: “The average age of someone inheriting assets in Ireland now is 60, so there’s a lot of planning around skipping a generation and giving it to grandkids trying to get on the property ladder.”
Well-to-do grandparents are using the small gift exemption – which allows someone to give €3,000 a year without the recipient paying tax – to create a fund for their grandchildren.
Each grandparent could gift €3,000 a year to their grandchild and their grandchild’s spouse, amounting to a combined €12,000 a year, which can quickly add up to a deposit for a house or to fund a wedding.
Some are also extending loans – which are taxable – to a grandchild, and using the small gift exemption to repay part of that loan every year, said Quinn and Oonagh Casey Grehan, a tax partner with Fagan & Partners.
Last month, the Commission on Taxation and Welfare recommended the State “substantially reduce the threshold” at which inheritance tax is paid.