Gifting Money to Children for Buying a Home: What You Need to Know
In Italy, it’s quite common for parents to support their children financially when it’s time to buy their first home. Often, this help comes in the form of a money gift. But here’s the thing: even the most generous gestures, if not done properly, can lead to unexpected tax implications.
Let’s take a closer look at what the law says and how to approach this with peace of mind.
What is a donation?
Legally speaking, a donation is a voluntary transfer of money or assets from one person to another, with no expectation of return. When large amounts are involved, Italian law requires a formal deed prepared by a notary, in the presence of two witnesses.
An exception is made for “modest value” donations, which don’t require formalities — though what qualifies as modest depends on the donor’s financial situation.
Direct or indirect donation?
When a parent gives money to a child to buy a home, it’s often considered an indirect donation. For example: the parent transfers the funds directly to the seller or to the child’s account before the purchase.
Here’s the good news: according to a recent ruling by the Italian Supreme Court (No. 17424/2023), if the donation is clearly linked to the purchase of a property that is subject to registration tax or VAT, no donation tax is due.
Even better, you don’t need to declare this in the notarial deed — as long as you can prove, if asked, that the money was indeed used for the purchase.
How much can you donate tax-free?
Each parent can donate up to €1 million per child without paying any donation tax. Beyond that threshold, a 4% tax is applied to the excess amount.
But remember: even if no tax is due, it’s essential to ensure the transaction is traceable and well documented, in case of future audits or family disputes.
So, what do I recommend?
• Always use traceable methods like bank transfers, with a clear reference in the description (e.g., “Gift for property purchase”);
• Keep all supporting documents, including bank statements and written communications;
• Consider consulting a notary or tax advisor, especially for large sums;
• And if you’re unsure… just ask! It’s better to clarify everything upfront than face issues later on.
Gifting money to your children to help them build their future is a beautiful and generous act. But even these good intentions deserve to be handled with care and the right safeguards.
If you’re thinking about buying or selling a home with help from a family member, let’s talk — I’ll be happy to guide you every step of the way.
