A survey from Taxback.com shows that almost two-thirds (59pc) of taxpayers believe that parents should be allowed to help their children purchase homes if they can. As such, financial input from parents is having a major influence on the housing market and may be inflating property prices.
Figures from the Banking and Payments Federation Ireland (BPFI) show that in the first half of 2021, nearly 42pc of first-time buyers used gifts as part of their deposits, while almost 25pc of movers did the same. But the public is divided over the “bank of mum and dad” and the ability of some parents to give their children a leg-up in this regard.
Just over half (51pc) said parents should be allowed gift their children as much money as they want, without either side being penalised by tax, while (41pc) voiced concern over the practice.
This is a finding from the latest Taxpayer Sentiment Survey, which looked at the views of 1,200 taxpayers.
Aside from an annual small gift exemption of €3,000, parents can gift up to a maximum lifetime tax-free threshold of €335,000 to their children.
In Barry Cahill’s view of Taxback.com, “Many people support the personal choice of a parent when it comes to giving their adult children money to help them along in life. And on the one hand, this is completely understandable – we work hard to provide for our children, and parents want to give their kids the best life they can.”
He went further to say that the “bank of mum and dad” did risk dividing society into “haves” and “have-nots”.
For example, “If there are four or five people bidding on the same property, and one can drop in a gift of €50,000, or possibly more, to seal the deal, it creates a very different playing field, and also has a knock-on effect on house prices throughout the neighbourhood,” he explained.
“The question that regulators and Government should potentially now be asking is whether the ‘bank of mum and dad’ is becoming a banking force in and of itself? One that is working in tandem with our pillar banks and hugely impacting the property market.”
LSL News.