As we navigate the complexities of financial planning and wealth distribution, one strategy has gained traction among parents in Ireland: gifting substantial sums of money to their children. Recent studies show 7 out of 10 parents in Ireland have gifted money to their children to help them buy their first home. At my webinars and seminars throughout the country, I always make a comment to the audiences to tell their parents they can gift their children up to € 400,000 without having to die first !
In 2025, the prospect of parents gifting up to the inheritance tax free threshold € 400,000 to each child offers several advantages that can transform not only the financial landscape of families but also the future of the children involved and the country. John Lowe of MoneyDoctors.ie outlines the benefits and long-term impacts of such generous gifts in the context of rising living costs, educational opportunities, and wealth transfer strategies.
1. Ireland’s housing market has faced significant challenges over the past decade, marked by soaring property prices and a shortage of affordable housing. With the average house price in some parts of Dublin exceeding €500,000, young adults face daunting barriers when trying to enter the property market. By gifting up to €400,000 – if they have it – parents can help their children bypass these hurdles, facilitating home ownership and providing a stable foundation for their financial future. Owning a home can lead to long-term financial security, offering both an asset and the ability to build equity over time.
2. Investing in education
Another compelling reason for parents to consider gifting substantial sums is the increasingly high cost of education. Whether it’s funding a university degree, vocational training, or even entrepreneurial pursuits, the financial burden of education is significant. In 2025, average tuition fees are projected to rise, making it essential for parents to plan ahead. 3rd level fees for the basic primary degree can cost up to € 42,000. Some parents unbelieveably are saving the Child Benefit € 140 per month from their child’s first month – it ends on the 19th birthday and the total of € 30,240 is STILL short of that 3rd level mark ! An inheritance gift of any amount could alleviate the educational expenses, student loans, and even contribute to their children’s living costs. This not only alleviates financial stress but also allows children to focus on their education without the pressures of significant debt. In America, the student pays for the 3rd level education with massive loans that they pay over the first 10 years of their working career.
3. Encouraging financial literacy and independence
A well-structured gift helps instil financial responsibility in children. When parents provide their children with significant funds, it opens discussions about budgeting, saving, and investing. Instead of simply handing over money, parents can set conditions that promote financial literacy, such as requiring children to develop a budget plan or to consult financial advisers. Teaching children how to manage large sums responsibly can prepare them for future financial challenges, encouraging independence and sound decision-making abilities from a young age.
4. Leveraging tax benefits
In Ireland, parents can make tax-free gifts to their children up to a certain threshold under current capital acquisition tax (CAT) rules. As of October 2024, the tax-free threshold for gifts is set at € 400,000, meaning any amount gifted over this threshold will incur a Capital Acquisition Tax liability at a rate of 33%. This makes gifting larger amounts strategically beneficial, especially if parents plan to pass wealth down to multiple children. Proper timing and structured gifting strategies can minimise tax liabilities while maximising the financial support provided to children. Investing a little time to consult tax professionals can yield significant long-term savings.
5. Fostering family bonds
Gifting significant amounts to children can also deepen family connections. Such generosity often leads to gratitude and appreciation, fostering stronger relationships between parents and children. It can also serve as a conversation starter around important family values, such as financial responsibility and community involvement. When parents actively participate in decision-making processes regarding these gifts, it can encourage a spirit of collaboration and mutual understanding with their children.
6. Supporting gratifying life choices
Substantial financial gifts enable children to pursue personal passions and make significant life choices without the heavy burden of financial limitations. Whether opting for a dream career path, starting a business, or traveling to broaden horizons, having a financial safety net allows children to take calculated risks and pursue happiness on their terms. This empowerment can lead to more fulfilled and well-rounded individuals who give back to both their parents and their communities.
7. Future-proofing the next generation
As the world continues to evolve with rapid technological advancements and fluctuating job markets, parents want to ensure that their children are well-prepared to thrive. By providing a financial foundation, parents can help their children be more adaptable and better positioned to seize opportunities as they arise. From investing in emerging technologies to transitioning between careers, a financial cushion can afford children the freedom to pivot when necessary.
The decision to gift up to € 400,000 to children is not merely a financial one; it is a strategic investment in their welfare, independence, and future success. By mitigating housing challenges – government permitting..an awful lot of houses have yet to be built, supporting education, encouraging financial literacy, and fostering family bonds, such gifts can create a ripple effect of positive outcomes. As we look towards the future, parents are faced with the unique opportunity to leave a lasting legacy if they have the money, making thoughtful financial planning not only beneficial for their children but also advantageous for the entire family unit. Investing in their children today ensures a more secure and hopeful tomorrow.