Gift Tax - giving house to daughter

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Glen25

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Howdy folks..
I need a bit of advice for my parents. They have a second home (all above board re taxes etc). Both myself and my brother have our own house and I have suggested to my parents that should give this house to my sister as she isnt in a position to buy one herself and prob wont be for a while. They are concerned that my sister will have to pay some sort of tax on this. I have checked out revenue.ie and it seems that she wont have to pay any gift tax or other if this were to happen.
My question is this: will my sister have to pay any sort of tax (Gift, CAT or other) on the transfer of the property? I'm specifically asking as this is a second home and not the sole residence of my parents. I'm not sure if this is even relevant. The value of the house is only about €150k so well under the normal threshold for gifting from parent to child.
Thanks in advance.
Glen25
 
Hi Glen,

your sister will not have to pay any CAT on the transfer (although it will of course use up some of her threshold), but she will be liable to stamp duty of Eur1500 if the market value is 150k.

Your parents, however, will be liable to CGT if the house has increased in value since they bought it.

Sybil
 
Sybil,
Thanks so much for your reply. I think they paid about €36k for the house many years ago (it belonged to my grandmother and they bought it when she died). Am I right to assume that the CGT is 20% of €114k? Then there will be solicitors fees too I'm sure. Would this be all the costs do you think?
Thinking about it, I reckon the value may well be below €150k at this stage too so it may be a viable transaction for all involved (not much surplus cash floating around to pay taxes, solicitors etc)
Thanks again - I'm trying to get as much info for them before they go down the road of paid advice for a transaction like this ;)
Glen25
 
CGT is now 25%.
Were there other costs in the purchase of the house?
Depending on the dates of purchase, indexation may reduce the taxable gain. Also any capital expenditure (e,g, new roof) can be included as an expense, indexed if applicable.
Your parents have each an annual small exemption of €1270.
 
Now is probably a good time for such a gift, as house prices have fallen a lot and the government hasn't increased capital gains tax too much. The rate of stamp duty is also low. So well done to you for suggesting to your parents to gift the second house to your sister, hopefully they'll be able to do it.
 
Folks,
Thanks for all the replies. I spoke to my parents over the weekend so I think it may be something to seriously look at. It'd be great to get her set up at a relatively low cost if possible.
Thanks again,
Glen
 
If they let your sister live in the house for three years before transferring it to her, it will be ignored for CAT purposes and so will not use up any of her threshold. However, the risk with this is that the value of the house could rise over the three years or the CGT rate increase further and so the CGT liability at the end of those three years could be higher.
 
Your parents to leave the property to her under their wills which probably be the most tax efficient route at present. There would be no Stamp Duty or CGT payable on inheritance and the CAT situation would be the same as a gift. However that is assuming the property remains below the CAT threshold and there are no further cuts or tax changes.
 
I wouldn't really want to live in a house belonging to my parents for years and years, wondering whether I'll ever get it on their death or be left homeless... A lot may happen between now and the parents' death (assuming they are in good health). Among other things, the parents may need care later in life, and may need to sell their second house to pay for it, leaving their daughter homeless.

Also CAT thresholds may be decreased and CAT rates increased.

It seems much better to do the transfer now, if it can be done with only smallish costs, OP's sister will then be secure.
 
I agree with the Dazza's suggestion. Transferring the property through WILL will be the better option as it will save many of the charges which are there in other options.
 
You have the best of intentions, hopefully your brother also thinks it's a good idea. Families can be funny, especially when it comes to money and inheritence.
 
It might be 4 months old but funnily enough this came up in conversation with my parents again only last week.. It still hasnt been progressed as my sister said she would feel a bit funny (scared?) living in my grandparents house..
Its a funny old world..
 
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