Tax efficient way to transfer property to a sibling with MS

I am one of four sisters who built a house jointly some years ago but none of us have ever lived in it (it has never been occupied apart from see below). We are all now married with separately owned main residences.

We have a younger 5th sister (27), who has been diagnosed with MS, to whom we would like to gift the property. As way of further background she lived in the property for three years to 2012 at no cost other than paying the bills for it and left to work in Australia in 2012 (due to recession). She was diagnosed in 2012 and will return to Ireland in one year when she can hopefully resolve the medical costs of her life long medication which she is currently receiving for free in Australia (the cost would be £10,000 euro in Ireland if she had to pay for it herself).

We would like to give her the stability of owning her own home near family links that can support her. She will in time become more incapacitated.

Can anyone please advise on the tax implications of gifting the house to her now. It would be her only residence if she received the gift. Would there be CGT? Does it impact on tax exempt thresholds for us in giving the gift (i.e. will it disadvantage our own families when it comes to passing on our own homes to our children for example). Any help greatly appreciated.

I can't see a problem. The sibling threshold is around €40,000 i think so with 4 of you that should cover the value of the house if it's around €160,000.

If it's more, she is liable for the extra, about 20percent i think (i'd look up the figures but i'm rushing) so say house is 200,000, she has to pay 20percent of the 40,000 (just a rough example)

It shouldn't impact any inheritance to your kids, different thing/thresholds.

Stamp duty will be payable and solicitors fees

HTH

Ladybird

The threshold for CAT for siblings is €30,150 with a small gift exemption €3,000.

The rate of CAT is 33%.

They may qualify for Dwelling House Relief if they fulfill the criteria http://www.revenue.ie/en/tax/cat/leaflets/cat10.html

Can't advise on CGT as you have not given any info on costs, current market value but assuming there is a Capital Gain I would not think that the PPR dependent relative provision would apply as your sibling was only diagnosed in 2012.

There is a provision for the offset of CGT against CAT arising on the same transaction.

Thank you for the reply. I have digested as best I can the revenue information but still having difficult with the various taxes that could apply and whether the limits for CAT for example are for the recipient or the giver (I think its the recipient). Is the limit a lifetime limit or could it be gifted in part over more than one year if the limit is annual.

I am sort of hoping that the dwelling house option could apply. My interpretation of this is if the criteria is met she would have no tax to pay or possibly just stamp duty?

She did live in it for the three years prior to leaving for Australia and it has remained vacant since she left. She does not own any other property or interest in a property i.e. this would be her only owned property and residence. She would not intend to sell it and it is a safe assumption that she will live in it forever.

The cost of building the house was in the region of 60,000 Euro over the time we built it (the original plan was to build it for our parents but they would not move in when the time came and hence it has not been used. I suspect if we put it on the market it would not sell for anything more than 150,000, if it did actually sell (abundance of property to sell in the same village - and which has not sold for over two years).

ladybird said:

I can't see a problem. The sibling threshold is around €40,000 i think so with 4 of you that should cover the value of the house if it's around €160,000.

If it's more, she is liable for the extra, about 20percent i think (i'd look up the figures but i'm rushing) so say house is 200,000, she has to pay 20percent of the 40,000 (just a rough example)

It shouldn't impact any inheritance to your kids, different thing/thresholds.

Stamp duty will be payable and solicitors fees

HTH

Ladybird

Click to expand...

The thresholds apply to the recipient, not the donor, so the sister could receive a total of €30,150 from all of her siblings before being liable to CAT.

Note the small gift exemption applies to each person from each person annually - each sibling can gift €3000 each year with no effect on thresholds.

It may be possible to move her into the house and then gift it to her in 3 years time, but there would still be a CGT liability on the donors.

Just a side point that might be relevant : your sister probably would be covered by the long term illness scheme when she returns to ireland.

She would not need to pay for any medication then - assuming it is prescribed by her consultant.