Buying Spouse's Parents House

T

ThomasAlan

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Hi,

My spouse's parents are considering down-sizing. And they have offered to sell their house to my wife and I to cater for our expanding family! I would guess that the house would be worth €300K. They have offered it to us for €200K. Not sure if it is relevant but it would probably need about €50K of renovation work to it.

I have a house in my own name. It is worth around €200K and I have €150K outstanding. If we were to proceed, I would hope to sell this house in order to have a deposit for my wife's parents house.

Can anyone advise about the tax implications? I assume that the difference between the market value (€300K) and the purchase price(€200K) will be deemed a gift? Is this taxable? Any advice of the most tax-efficient way to approach this?
 
The CAT thresholds are here
http://www.revenue.ie/en/tax/cat/thresholds.html
so up to 280k would work for your spouse, assuming no earlier gifts.

However, some unrelated questions arise.
Can you comfortably service the new anticipated level of debt?
Is ur missus an only child?
Could they fund a refurb/extension of ur existing house?


Put yourself in the spouses parent shoes and think about:
Depending on how they are fixed financially otherwise, is this the best strategy for them at their age/stage in life, need to perhaps consider homecare / nursing home, maybe in context of the Fair Deal Scheme.
What will they do with 200k?
Are they ready for 200k in the bank?
Are they both independently wealthy?
What happens if he/she puts it all on No 13 in the 3 o'clock at Haydock, or buys a S class Merc?
Could this impact on their Non Con state pensions
I do a bit of work in this area for folk who are not that well off and my advice is give older folk an income stream as opposed to a lump sum and hold on to the PPR as long as possible due to the SW Non Con state pensions means tests.
 
Branz said:
The CAT thresholds are here

so up to 280k would work for your spouse, assuming no earlier gifts.

However, some unrelated questions arise.
Can you comfortably service the new anticipated level of debt?
Is ur missus an only child?
Could they fund a refurb/extension of ur existing house?


Put yourself in the spouses parent shoes and think about:
Depending on how they are fixed financially otherwise, is this the best strategy for them at their age/stage in life, need to perhaps consider homecare / nursing home, maybe in context of the Fair Deal Scheme.
What will they do with 200k?
Are they ready for 200k in the bank?
Are they both independently wealthy?
What happens if he/she puts it all on No 13 in the 3 o'clock at Haydock, or buys a S class Merc?
Could this impact on their Non Con state pensions
I do a bit of work in this area for folk who are not that well off and my advice is give older folk an income stream as opposed to a lump sum and hold on to the PPR as long as possible due to the SW Non Con state pensions means tests.
Click to expand...

Thanks Branz,

With our combined income, we can comfortably service the new level of debt.

My missus is not an only child but her siblings are fully aware of what is going on. Both of us know that a situation like this can cause friction in a family. Indeed, it was due to that very fact that both of us were reluctant to take up the offer when her parents approached us. But having talked with each of the siblings, we have been re-assured that there are no issues there.

A refurb/extenxion of our existing property is not a runner. It is not even in the same county as where we have settled.

My parents-in-law plan to use the €200K to purchase a smaller house in the same area. I wouldn't describe either them as wealthy but both are financially independent. I realise that a situation like this is a minefield and gives rise to a whole host of questions but I'm just trying to get a handle of the tax implications for the moment.
 
Grand, then my understanding is that if the house is sold to your spouse for 200k, and its worth 300k, then a 100k comes out of her 280k CAT Group A threshold, which may assume that there is another 100k for each of the other siblings at some point.
http://www.irishstatutebook.ie/eli/1965/act/27/section/117/enacted/en/html
is always in my mind when I see these ideas, agreed verbally, child in Sect 117 is used to explain the relationship and is not an age related trigger.
How this is usually done is that the wills are amended to reflect the 100k

Keep well.
 
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