That does seem logical, given the recently published results of a research in respect of this exemption.
Jubelton
The exemption was introduced on a permanent basis in 2017 and amounted to €100,000 in that year. Based on this amount, the exemption has been nicknamed the “jubelton”. In 2021, following indexation, the exemption stands at €105,302.
The exemption applies to gifts made to individuals who are aged 18 or over but under 40. The gift must be used for the purchase, improvement or maintenance of the recipient’s tax-deductible home, or for the repayment of the mortgage on that home.
Objective
The exemption has two objectives. On the one hand, the aim is to reduce the total amount of mortgage debt on owner-occupied properties. On the other hand, the exemption is intended to help reduce the number of “underwater mortgages” (situations where the loan amount exceeds the value of the property it has been used to finance).
The study shows that the exemption fails to achieve either of these objectives. Total mortgage debt has only increased since 2019, naturally driven by the (sharp) rise in house prices. Negative equity mortgages are virtually non-existent now. However, this is not due to the gift tax exemption, but because house prices have risen.
It comes as no surprise, of course, that the exemption has mainly been used by the wealthy. Nor is it surprising to note that the grants mainly go to those homeowners who need this financial support the least. However, the wealth inequality created by the exemption could well be a further reason for its abolition.
Go and celebrate!
The advice to those who are able and wish to make use of the exemption is obvious: arrange the gift in 2021 (provided the conditions can be met).
Of course, we do not yet know whether the abolition forms part of the tax plans for 2022. What is clear, however, is that the Government will not extend the exemption. A motion in the Senate has called for this to be investigated.