buying house from parent. Cap gains tax due?? Help!!

[vicar]

Hi guys,
Hope you can help. Here the scenario: My girlfriends parents own a house (second house not their Principle residence)that they are willing to sell us cheap to get a foot up the property ladder, they are going to use the proceeds to buy a holiday apartment in the sun. My girlfriends parents have agreed to sell us the house at half the agreed valuation price.
So heres the deal... House was valued at €280,000 so we will buy at €140,000 as agreed. Now this is what i need to know, The house was originally bought 10 years ago for the equivalent of €60,000, there were obviously outlays such as stamp duty, solicitor fees etc at time of purchase so for agrument sake lets say the house ended up costing the parents €70,000.
If the capital gain tax is based on 20% of the difference between the buying price plus outlays and associated expenses less the selling price then the amount liable for CGT is €70,000 at 20% right ????
I need help with this guys as a number of people have told me that this is not the case and that the amount liable is the buying price plus outlays(€70,000) less the market valuation price (€280,000) which would make the amount liable for CGT at 20% of €210,000 and not 20% of €70,000.
Can this be true???
Any advice gladly appreciated.
Regards
Vicar

 

[mf1]

Its definitely market value - not a notional value or sale price.

You do need to get professional advice on something potentially so big - if this was not factored into the parents view of things, then it may not make any financial sense for them to do this. Plus they are making you a significant gift so you may well have a Gift Tax liability.

mf

 

[Kilkenny Tax]

Yes, market value imposed.

Also, CAT on the gift that you are receiving from your girlfriend's parents. Her gift will be under the exemption threshold but you will be liable to CAT on your portion of the house (above €23,336).

However, the CGT payable by your girlf's parents can be offset against this CAT (same event CGT-CAT credit).

Stamp duty also payable by you and your girlfriend. Your girlf can avail of consangunity relief which effectively halfs the amount of stamp duty payable.

From a practical point of view it makes more sense to have the entire house gifted to your girlf. You can still avail of your first time buyers relief etc. Also, if I was the parents of this girl I'd prefer to gift it to her on her own... you never know what lies around the corner.

 

[Purple]

mf1 or KT, Can you tell me if her parents still need the cash can they sell a half share in the house and to vicar and his girlfriend and gift the other half to her at the same time? As long as the CGT was paid on the sale wouldn't the gift then be under the CAT/gift tax threshold?