Aunt’s help to buy home will cost you unemployment income
Q&A: Dominic Coyle
If you have the money to buy a home, the Department of Social Protection / Intreo will consider that you do not need Jobseeker’s Allowance. File photograph: Getty
I am on Jobseeker’s Allowance of €203 a week and have saved all my life when working and not. My aunt gave me a little money and I am now able to buy a little apartment for €135,000.
How do I go about this with Intreo & Revenue? I am still unemployed and looking for work.
Will my Jobseeker’s Allowance be taken off me? Will I be questioned over my monies? If the amount over the €20k means test allowance is just from my aunt, is that okay? It is not inheritance, my aunt is still alive. Is the money considered a gift? Is there tax to be paid on it? Is there any way around that?
I am a first-time home buyer and it will be my only home that I will live full-time in and I will not be making an income from it by renting out a room or so.
Ms A.A., email
The idea of owning your own small place is attractive and it is great that your aunt has been in a position to help you out a little. However, any gift from your aunt – and, yes it is considered a gift – is likely to have implications for your Jobseeker’s Allowance.
You don’t clarify how much this gift is but, as you are on Jobseeker’s Allowance, I am assuming you are not in a position to be securing or paying a mortgage. That means the gift amounts to a significant portion of the €135,000 purchase, at least €115,000.
As a means-tested social welfare payment, your weekly payment will automatically be reduced to account for any additional savings or other financial resources that you come into. You say, you are receiving the full €203 weekly payment which means your savings must amount to no more than €20,000.
This is one of the ironies of the allowance. Once you own the property, its value will not be taken into account in assessing your means but, before you buy it, any money you accrue to do so counts against you as savings ... and any savings in excess of €84,000 would mean you get no weekly payment at all.
You ask about Intreo and the Revenue. Let’s take the two of them separately. Under Intreo rules, you are obliged to notify it and/or the Department of Social Protection if your circumstances change. Finding yourself suddenly in receipt of a gift of more than €100,000 would definitely be a change in circumstances from their point of view.
Failure to notify them could see them apply to claim welfare back from you, once they find out about it. And they are very likely to find out if you suddenly become a homeowner.
From Revenue’s point of view, there is also an issue. You can receive up to €32,500 from your aunt as a gift without paying tax. On anything higher than this, you must pay tax of 33 per cent. If you are receiving, say, €115,000, this would be a tax bill of almost €38,000.
And if you have previously received a gift of more than €3,000 from this aunt or any other aunt, uncle, grandparent, brother or sister,it is subtracted from the €32,500 you can receive on this occasion.
The fact that you will live in any house you buy and that you will not rent out any part of it is fine when you own it. That would ensure no impact on your welfare payment. Your problem with the Revenue (gift tax) comes before you make the purchase at all.
It does seem very unfair but, from the Department’s point of view, Jobseeker’s Allowance is a subsistence payment to avoid you falling into abject poverty. If you have the money to buy a home, the Department / Intreo will consider that you do not need such State support.