Gifting our children or grandchildren is a very natural thing and something we’d like to do to help them along the way. Unfortunately this is not easy from a taxation point of view. We can only gift a certain amount in a life time before a 33% tax kicks in.
The thresholds in Ireland are quite limited and could be quickly triggered if there is property involved. This means we have to be clever about how we pass on wealth and help our loved ones. This involves financial planning and availing of an optimal strategy before your children need the money.
Anyone in Ireland can gift another individual €3000 every year tax-free without affecting your lifetime allowance. Therefore you and your husband/wife can gift each of your kids/grandchildren €6,000 without affecting their inheritance or gift allowance.
Gifting €6,000 a year over 10 years with 5% investment return will produce a pot of just under €80k.
After 20 years it would be worth over €200k This would go a very long way to helping your children on the property ladder. (With €200k they might even throw in a granny flat for us parents!)
So plan ahead and avail of this strategy. In 10 years it will be too late and cost your loved one’s more in tax.
Remember, the €3000 limit is yearly, so every year you don’t take action is a year wasted!
If you would like more information on inheritance tax savings plans, please give the office a call on 01 639 2908 or email me on firstname.lastname@example.org.
Business Owner? download our ebook: TaxClever Secrets: 7 Tax Strategies Every Irish Business Owner Needs to Know at taxclever.ie