Parents weigh inheritance valuation on gift subject to a very informal family arrangement but unwanted tax issues may arise inadvertently
Parents bought apartment in son's name ahead of college but then they took the benefit of the rental income. Photograph: iStock
This may not be relevant but our son has since returned from abroad and now manages the property and receives the income from it.Do you live in Kildare, Meath or Co Dublin? Then you’re likely to be in a mortgage switching sweet spot In relation to the purchase and the maintenance fees/property taxes, the relevant threshold would have been the Category A threshold that applied at each date you were making these financial gifts. You’ll need to check back on what that threshold was at the time which you can do
Like the inheritance tax threshold, the value of the small gift exemption has also changed over time. It amounted to £250 per person back in 1969 when it was first introduced. You will need to check but I believe it was worth £1,000 when we transitioned to the euro and rose to the current level of €3,000 in 2003. The value of the benefit to your son on having costs associated with the apartment paid on an ongoing basis must be measured against the rules in place at the time.
But that ownership would certainly be enough to deprive him of access to various first-time buyer exemptions in recent years – including, for instance, Help to Buy, or the higher multiples on borrowing allowed under Central Bank rules – on the basis that he is no longer considered a first-time buyer.
But I am not sure how Revenue will consider your enjoyment of the net rental income as anything other than a gift from your son to you. That raises potential issues for you and your wife as are considered as Category B beneficiaries for gift and inheritance tax purposes on anything you receive from your son, unless he has died.
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