The temporarily increased gift tax exemption is a crisis measure designed to stimulate the housing market. Under this scheme, a tax-free gift of up to €100,000 in connection with a owner-occupied property may be made until 31 December 2014. The amount gifted must have been spent on the purchase of the property or on repaying the mortgage debt before 1 January 2015.
In response to parliamentary questions, the Government recently stated that, if the full amount of the gift could not be spent in 2014 on instalments for a property under construction, the temporarily extended exemption will still apply, provided that the remaining amount is spent on the next instalment(s) of construction in 2015.
A more generous time limit for spending already applied to expenditure on improvements or maintenance to one’s own home. In such cases, a gift made in 2014 may be used in 2014, 2015 and 2016 without any adverse consequences for the extended exemption. The reason for this is that renovation work often takes longer, making it more difficult to plan when the gift will be spent than is the case with the purchase of a property or the repayment of a mortgage. However, the property must already have been owned by the recipient of the gift in 2014.