With residential house prices skyrocketing and the possibility of rent pressure zone caps ending at the end of the year, many parents are concerned about their children entering the property market. There are multiple ways that parents can help their children get onto the property ladder.
Capital Acquisition Tax Limits
Parents giving children a financial gift fall under Group A for Capital Acquisition Tax (CAT) purposes. As of the 2025 budget, the tax-free threshold for this group is €400,000. A child can receive gifts or inheritances up to this amount from their parents over their lifetime without paying any tax. Any part of the gift which exceeds the €400,000 threshold, is subject to CAT at a rate of 33%. Many people associate CAT with passing money or assets to children upon death but the opportunity to give a financial gift to children during the parents lifetime should be considered.
Small Gift Exemption
Under the Small Gift Exemption, any individual can receive up to €3,000 from any other individual each year without the gift being subject to CAT. There is no limit to the number of people giving gifts, so multiple family members can give separate gifts of €3,000 each to the same recipient annually. For instance, each parent can each gift €3,000 to their child, allowing the child to receive a total of €6,000 from two parents, tax-free in a year. Grandparents can also give this gift to their grandchildren. Metis Ireland can help you with setting up a Bare Trust on an investment account, which would allow the funds to be invested. The Small Gift Exemption does not count towards the Group A lifetime limit under CAT rules. This means you could give your child €3,000 each per year (€6,000) and also gift them €400,000.
Inter-Family Loans
Inter-family loans (loans between family members for example from parents to children) are legal and a very usual tool, especially for things like helping with a house deposit or business startup. However, there are important legal, tax, and financial implications to be aware of.
It’s important to clarify whether the money is a loan (repayable) or a gift (non-repayable), because this affects tax treatment:
- Gift: Subject to Capital Acquisitions Tax (CAT) if it exceeds certain thresholds (which is discussed above)
- Loan: No CAT liability if it’s a genuine loan with an expectation of repayment.
It is important to note that the loan must be genuine and repayable. It is strongly advised that you create a written loan agreement similar to a traditional loan agreement. This could include the loan amount, repayment terms, timeline, record of repayment or changes. It is important to note that an inter-family loan does not have to include any interest making it a great opportunity for helping your child.
If you are trying to help your child/children with buying their first home, please reach out to Metis Ireland and discuss your goals with one of our Private Client Managers today.
Disclaimer
Metis Ireland Financial Planning Ltd t/a Metis Ireland is regulated by the Central Bank of Ireland.
All content provided in these blog posts is intended for information purposes only and should not be interpreted as financial advice. You should always engage the services of a fully qualified financial adviser before entering any financial contract. Metis Ireland Financial Planning Ltd t/a Metis Ireland will not be held responsible for any actions taken as a result of reading these blog posts.