You may have heard of tax-free gifts. These gifts allow parents and grandparents to provide financial assistance to their children so that they can buy a home in this hectic housing market. But how exactly do these tax-free gifts work? And what conditions apply? In this blog, we will tell you more about tax-free gifts.
How much can you give or receive tax-free?
In 2022, you can receive up to €106,671 tax-free. However, you must use this money to buy or renovate a house or to pay off your mortgage.
Do you have to spend the gift immediately?
The advantage of the tax-free gift is that you do not have to spend it immediately. You have two years (until 2024) to spend the money on your home. There are no rules attached to this two-year period.
Who is eligible for tax-free gifts?
It is often thought that only parents or family members are allowed to make tax-free gifts, but nothing could be further from the truth. In fact, anyone can make a tax-free gift. So even that generous acquaintance of yours can give you money. Although there are no rules attached to this, you do have to meet a number of conditions.
The tax-free gift applies per donor.
Did you know that different people can give you a tax-free gift? The total amount of each gift may not exceed €106,671. But be aware that there are exceptions. The tax authorities consider partners to be one donor. This means that grandparents cannot give gifts separately from each other. These amounts are then added together.
Conditions for tax-free gifts
As mentioned above, there are a number of rules and conditions that apply to tax-free gifts. These are the conditions:
- The recipient(s) of the donation are between 18 and 40 years old. The day of the 40the birthday still counts.
- The donation must be used to purchase or renovate a house or to pay off your mortgage.
- You must use the money by 2024 at the latest, or by 2023 if it is a gift you received in 2021.
- You can provide written proof that the gift has been paid and that you have used the gift for your own home.
- Neither you nor your partner have previously used an ‘increased allowance’ for a gift from this donor.
For a complete overview of all terms and conditions, please refer to the website of the Tax Authority.
Abolition of tax-free gifts?
At the end of 2021, it was included in the response agreement that the tax-free gift for owner-occupied homes will be abolished. By abolishing this gift, the government hopes to create more opportunities and equality among young home buyers. It is not yet known when exactly the abolition will be implemented.
Assistance from our advisers with tax-free gifts
Until the tax-free gift is abolished, we will be happy to assist you with this gift. Our advisers will work with you and advise you on how best to use this money.