As a parent, you undoubtedly want the best for your children. From providing them with a stable home to a good education, you strive to give them everything they need to thrive. But what about when it comes to taxes? If you’re thinking about selling an apartment or other property and wondering whether you can avoid or minimize the tax burden for your children, this article is for you. We’ll explore some of the most common questions related to taxes and property sales, and provide you with the information you need to make informed decisions about your family’s finances.
In 2012, I used my redundancy money of €150,000 to purchase an apartment. Now, at the age of 70, retired with a private pension, I am considering selling it for approximately €260,000. I already have a private paid-for house and adult children. I want to know the capital gains tax (CGT) I will need to pay on my profit and if it is possible to give half of the profit to each of my children to avoid paying CGT. Capital gains tax is paid on the difference between the sale proceeds and acquisition price, as explained by Marian Ryan, Director at Taxback.com. The first €1,270 of any gain is tax exempt, and the current CGT rate is 33%. However, there are various reliefs that can lessen the bill, such as the Principal Private Residence relief or the seven-year relief. Even though transferring the profit to my children may help avoid CGT, it will make them susceptible to Capital Acquisition Tax (CAT). CAT liability can be removed through the yearly gift exemption of €3,000 and the tax-free threshold of €335,000 for group A. Gift and inheritance accumulations must be combined for these thresholds, which are lifetime thresholds. There will not be any CGT if I leave the property to my children after my death, but they will be liable to pay CAT. If they sell the property later, CGT will be due again. In another question, a single mother asks if she can contribute more to her pension plan than the amounts allowed under auto-enrolment (AE) if her employer does not offer a work pension scheme. Glenn Gaughran, Head of Business Development at Independent Trustee Company, states that the contributions of the employee and employer, along with the State, will be limited to 1.5%, 1.5%, and 0.5% of earnings, respectively, for the first three years. For the first three years, the total contributions allowed are only 3.5% of earnings, which is inadequate. There seems to be no flexibility in the current AE plan for the amounts that can be contributed. Lastly, a traveler planning to take a car trip in Europe for six months asks about insurance coverage beyond the 90-day limit of their current policy. Billy Shannon from Aviva Insurance explains that insurance policies across EU countries must offer the minimum legal insurance cover of any other EU country, as stipulated by the EU First Directive on Motor Insurance. Most insurers offer full policy coverage in the EU for a defined period, after which the rules may vary. Some may lower the coverage to the minimum required by law in the EU nation of destination, while others may offer an extension of full coverage. However, a fee may be charged, and the length of the extension could vary depending on the insurer. It is best to consult with the insurer or an insurance intermediary for advice and access to various insurance products offered by different companies.
In conclusion, navigating personal finances can be a complex and sometimes overwhelming task. However, seeking advice and guidance when it comes to tax obligations and property transactions can help you make sound financial decisions. With the right knowledge and resources, you can avoid unnecessary tax burdens and secure your family’s financial future. Don’t hesitate to reach out to a financial advisor or tax specialist for further guidance on your specific situation. Remember, every bit of knowledge can go a long way in securing your financial well-being.
