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Valuation date and the value of benefits

  1. Overview
  2. What is the valuation date?
  3. Limited interest
  4. Rights of residence
  5. Annuities and other periodic payments
  6. Free use of property and interest free loans

Free use of property and interest free loans

Free use of property

If you have the use of a property for free or for less than it is worth this is a benefit, and you may have to pay tax on it. If you use the property over a number of years the benefit is regarded as being received on 31 December each year.

  • Example

    Anne gives her cousin Colette the use of her house. The annual rent Anne could receive for the property is €15,000. Colette pays Anne €5,000 per year.

    Colette is deemed to have received a gift of €10,000 on 31 December each year that she has the use of the house. Each gift is taken into account for aggregation purposes.

Interest free loan

If you receive an interest free loan this is a benefit and you may have to pay tax on it. The relevant tax date for this benefit is 31 December each year until the loan is paid off. The value of the benefit is the rate of return the funds would generate if they were invested on deposit.

  • Example

    Joe gives an interest free loan of €300,000 to his nephew John on 1 January. The highest rate of return he could receive from an investment on deposit is 1.5%.

    Multiply €300,000 by 1.5%
    Taxable value = €4,500

    This is regarded as a gift of €4,500 to John. The relevant tax date is 31 December each year until the loan is paid off. Each gift is taken into account for aggregation purposes.

    If John repaid the loan during the year, the date of repayment would be used to calculate the value of the gift for that year. If he repaid the loan at the end of October, the value for that year would be: €4,500 divided by 12 multiplied by 10 = €3,750

Published: 17 May 2017 Print this page

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