Parents can help children save for a home while avoiding tax penalties

Parents can help their children save for a home while navigating tax rules. The tax-free threshold for gifts from parents is now €400,000, meaning children can receive this amount without incurring Capital Acquisitions Tax. Gifts above this limit are taxed at 33%. A strategy called "drip-feeding" allows parents to give smaller amounts over time, which can be more tax-efficient. Additionally, parents can use the small-gift exemption to give €3,000 per year tax-free, allowing for a total of €12,000 for a couple if both parents and a partner are involved. Some lenders may require a letter confirming that funds are a gift, not a loan. Future planning, such as using a whole life insurance policy, can help offset potential inheritance tax liabilities for beneficiaries.