THE SMALL GIFT exemption should increase from €3,000 to €5,000, so parents can help their children with a deposit for a house, according to Fianna Fáil TD Cormac Devlin.
The Small Gift Exemption allows individuals to receive up to €3,000 per year tax-free from any one person.
As a result, under the current system, parents can gift their child €3,000 per parent, totally €6,000 per year.
Devlin said this threshold has not been revised in years, despite the sharp rise in housing, education, and everyday living costs.
The Dun Laogahaire-Rathdown TD told The Journal that it has effectively been “frozen” since the Euro was introduced over 20 years ago.
“Two decades of rising rents, college costs and deposits, and the figure hasn’t moved once and an increase is warranted to give families a break,” he said.
The mechanism is often cited by financial advisers as a way parents can gift their children money, without it eating into their inheritance.
Currently, a child can inherit up to €400,000 from their parents in their lifetime before capital gains tax of 33% kicks in.
Parents want to help children with house deposits
Devlin said parents are looking for ways to help their children get on the property ladder, by helping with their house deposit in the most tax efficient way.
“Parents and grandparents want to help younger relatives with a deposit or college fees. Raising the exemption to at least €5,000 would let a young person receive that from each parent, €10,000 in total, without touching their lifetime thresholds. It’s a modest, practical change, and it’s long overdue,” he said.
His comments come after strong indications from both Fianna Fáil and Fine Gael that inheritance tax changes are on the cards in October’s budget.
Asked about it in the Dáil this week, the Taoiseach said:
“We will examine this again the context of the budget to see what we can do, particularly on that issue of those without children and so on who want to leave an inheritance. The costs are significant as well,” he said.
A source said the Tánaiste “understands the burden inheritance tax can place on families seeking to pass on a home or farm to the next generation”.
“He has consistently said there are fairness issues in the current system and that these deserve consideration.
“The Tánaiste has also said he wants to reduce the tax burden on all workers and has committed to introducing an income tax package.
“All of these matters will be carefully considered over the coming weeks,” they said.
Harris has previously stated that the thresholds are “unfair”.
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