ECONOMY

Tranches paid as parental gifts

tranches-paid-as-parental-gifts

Citizens will be able to pay their mortgage tranches through parental gifts in cash if their mortgage concerns their main residence.

According to a circular issued by Independent Authority for Public Revenue director Giorgos Pitsilis, cash gifts of up to 150,000 euros from parents to their children for the acquisition of a primary residence will be tax-exempt. Crucially, the same circular adds that those who have acquired their main residence through a housing loan will be able to pay their tranches through parental gifts.

On the other hand, there will be a 10% tax from the first euro imposed on parental concessions in cash for the construction of a house on a plot acquired by a forebear, or for the acquisition of a property abroad.

Note that the clauses voted in the summer provide for zero tax on the concession of cash amounts up to €150,000 from parents to their children for the acquisition of their main residence, while for any amounts above that limit there are growing tax rates from 1% to 10%.

Nevertheless, according to the Pitsilis circular, taxpayers must be aware that the tax-free ceiling of €150,000 also concerns any previous parental cash gift; therefore, if a parent has in the past given €100,000 to their child and then goes on to gift them another €60,000, there will tax payable for the extra €10,000 above the total amount of €150,000.

The circular also rules that for a parental gift to enter the tax-exempt category, it must be clearly documented that this was made for the purchase of a specific property that is meant to be the child’s main residence. Since the declaration of a donation or parental concession is submitted within a six-month period from its occurrence, the declaration will have to include the details of the property transfer tax declaration and the transfer contract for the tax authorities to be able to establish whether the measure applies in each case. Parental payments for the signing of provisional contracts are excluded from this regulation.