Buying in-laws out of family home

[JohnDoyle1973]

Do you have that in writing from Revenue? That's pretty costly. When I was executor for a parent I only got one valuation.

I have it from the Revenue case worker who was assigned to me via my tax specialist. Yes it is costly but it negates any doubt.

 

[JohnDoyle1973]

Except in this case it's not under that rule as they are living in the family home with the MIL.

But you can get Small Gifts Allowance to the value of 3k regardless of where you are living. It makes no difference.

 

[JohnDoyle1973]

Did you get professional advice on whether or not to comply with that request?

Yes. It was advised by two separate tax advisors.

 

[JohnDoyle1973]

But your post is wrong. You can sell a house for €1, but the buyer will be assessed for CAT on the difference between the sale price and the market value. It's perfectly legal to do this and is cheaper than paying market price.

Thats what I said in my post. The market value of 200k for a house is the value Revenue look at, If I get it for 100k and pay that for it then the assessable value for the gift is the difference between the two. In this example in my post here its €100k.

 

[JohnDoyle1973]

You are both saying the same thing here @JohnDoyle1973, why do you think Brendan is wrong?



She would not be in any trouble at all, she (and/or OP) would have a potential tax liabilty.



There does not appear to be any question of ignoring the consequences (in this instance a potential tax liability) or letting them go "down the line"

Also, to reiterate, an adult living in a "spare" property belonging to their parent is taxable. An adult living in the family home with the parent is not.

I think Brendan ignored what I said to suit himself.
There is a tax liability if they pass the house on at what the MIL wants to give it to them - 90K - thats not the real value therefore there will be a liability. The poster seems unaware of this and thinks 90K will sort it all out. It wont. The liability is the difference between the 90K and whatever the market value is ( arrived at through a valuation).

 

[JohnDoyle1973]

He said he paid 16K for advice. It must be 'gold plated' advice at that level.

Dear Bronte,
First you message me privately to tell me 'It's his site and his way' in relation to Brendan's policing of the site and now you criticise my spending on righting my tax afairs despite having no idea about the complexity of them, value of assets, personal situation, previous assets recoieved etc. Tax advice currently is €175 - 250 per hour should you need to know + VAT.
Odd. Hope the above helps.

 

[Fortune]

Thats what I said in my post. The market value of 200k for a house is the value Revenue look at, If I get it for 100k and pay that for it then the assessable value for the gift is the difference between the two. In this example in my post here its €100k.

That's not what you said (but probably what you meant).

 

[Clamball]

To get back to the OP

You MIL is still alive, living in her house and she wants to pass ownership to her son and you now before she dies. She wants to invoke the clause in her will that she leaves her son the house and that the son pays 3 siblings €30K cash each. Your family have lived in the house for 15 years, paying rent initially and afterwards paying bills and doing maintenance. Your MIL should get independent legal advice on whether this is the best option for her, make a new will if she goes ahead, and ask what impact this would have on fair deal if she had to avail of it in the future. She should get tax advice on her rental income to regularise it with revenue.

So you and your husband should buy the house for €90 and give that money to your MIL. You and you husband should get independent legal advise on the best way to do the purchase to minimise CGT. You will need a valuation of the house as the difference in its value, and the amount you pay will be considered a gift from you MIL to you both. You may need to pay revenue more than just stamp duty on the transaction. Plus there are conveyancing fees on both sides that will need to be paid.

Your MIL now has €90K which she can give €30K each to her other 3 children or wait until she dies etc. She should ensure she has a legal right of residence in the house until she dies built into an agreement between the 3 of you. Her 3 children would have less of a tax risk is she gave them €30K each rather than you did. She may be advised independently to keep the €90K for her own use as she may need it before she dies. She will have fees around selling the house, etc.

Overall it may be a poor deal for your MIL giving away all her assets before she dies as she may have unknown future needs, so she needs to be advised independently of the family.