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Sinead Ryan: Capital Gains? More like Revenue gains if you're helping your kids

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SQUEEMIDS: Looking after money is key

SQUEEMIDS: Looking after money is key

SQUEEMIDS: Looking after money is key

Revenue normally makes loud noises when it wants us to know about taxes we have to pay, with dire warnings if we don't pay up.

And so they put the fear of God into people when it comes to the Local Property Tax, income tax or VAT.

However, quietly slipping under the radar on Christmas Eve came a briefing note regarding Capital Acquisitions Tax.

This note was to 'guide' people through the maze of taxes due on money which you receive from someone else as a gift, or inherit on their death.

This chiefly applies when parents give money or assets to their adult children during their life, or after their death - which is both their right and wish.

For instance, most adults in Ireland can expect to be left the family home when their parents pass on.

Likewise, many parents may want to help out financially while they're still alive by giving their kids some of their hard earned (and already taxed) savings towards their wedding or first car or first home.

It's a normal Irish family act of kindness, made by thousands of well-meaning parents every single year and gratefully received by their adult children.

ignored

Up to now, most of this was largely ignored by Revenue. After all it was in the open and for a specific purpose, not to hide assets in the Cayman Islands, or distribute fortunes in far flung trusts away from the prying eyes of the tax man.

But two factors have now come into play.

Firstly, while the tax-free amount a child can receive from a parent throughout their life is €225,000 (including the family home), this threshold has been halved in the last five years.

The tax payable on anything over this figure (adding up all the gifts and inheritances received), at 33pc, is the highest on the planet.

Secondly, for many adult kids, their childhood home makes up most of this inheritance. With values rocketing, especially in Dublin, the chances of hitting the tax free threshold is a lot quicker than would have been the case in previous years.

This can mean that they end up having to sell the house, which they may have wanted to live in, in order to satisfy Revenue.

But, more sinisterly, many 'gifts' largely ignored heretofore are now coming under the tax radar.

Your daughter's wedding? That's okay as a family expense, but pay for her honeymoon and it's suddenly a 'gift'.

clobbered

Paying for her college tuition is fine until she's 25. But if she's a mature student and wants to go back to re-skill you're now 'gifting' her the fees and she can expect it to be treated as such.

If you have a second home and let her live in it rent free, she'll be clobbered with the 'gift' you've given her, at full market value.

Buy her that first car? Well, it'll be taken down and noted, to be totted up at a later stage. And as for a house deposit, well that's a big no-no.

Hand over your savings of, for example, €25,000 to help her hop on the property ladder and Revenue will view it as a present and knock it off the amount she's allowed receive tax free from you, her mum and dad.

The only allowance being left untouched is the 'Small Gifts Exemption', a paltry €3,000 pa which anyone can donate to anyone. Catching wealthy people who use estate planning for nefarious purposes is laudable.

But targeting the vast majority of very ordinary, non-wealthy parents who just want to lend a helping hand to their kids is just unfair.


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