The Bank of Mum and Dad is partially to blame for Ireland’s housing crisis, according to the Banking and Payments Federation.
Last year 42% of first time buyers used a gift from their parents to help get on the property ladder and Sinéad Ryan, presenter of The Home Show, say this is distorting the market:
“The minute you have people who are gifted money, that is kind of inflationary, it pushes up house prices,” Sinéad told Lunchtime Live.
“TaxBack.com did a survey around this figure and revealed that 59% of taxpayers… think that you should be allowed to gift your children any amount you like without tax being a problem.
“I suppose, it really depends on what side of the divide you’re on. If you’re a first time buyer and you’ve parents wealthy enough to be able to do this - well, happy days!
“But if you’re not and you don’t, you are struggling and bidding against all of those people.”
Listen and subscribe to Lunchtime Live on Apple Podcasts, Google Podcasts and Spotify.
One option for people who don’t have the option of a loan of gift from the Bank of Mum and Dad is to apply for financial assistance from the Government:
“Of course, the Government gifts people deposits under Help to Buy,” Ms Ryan continued.
“Only if it’s a new property and you can get back up to €30,000.
“So there’s a lot of stuff feeding into where house prices are going but gifts, whether it’s from the state or from parents or from anybody else, definitely has a major part to play.”
However, gifting an adult child or relative money does have tax implications - especially if you plan to leave someone more money in your will:
“Tax of course is a big factor in all of this; tax policy between, say parents and children, is quite generous,” Sinead continued.
“Gifts and inheritance are exactly the same, they’re treated the same in law. So you can gift an adult child up to €335,000 before it becomes a taxable event.
“But that is a lifetime gift.
“As a result, if you say gift someone €50,000 to help them buy their first home, well by the time you pass on, you can only will them [€285,000] before there are tax implications.”
Last week the Simon Communities of Ireland found in its quarterly report that only one in 10 rental properties in Ireland are affordable for those in receipt of Housing Assistance Payment; of the 1,349 properties surveyed only 148 were priced at an affordable level.
Main image: Construction workers wearing hard hats on scafolding working on a roof of a housing construction development in Naas Co Kildare Picture by: Eamonn Farrell/RollingNews.ie.