Calculating CAT on property sale after divorce

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mc_arigead

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I think I might be liable for CAT if I buy out my ex's share of the family home. Divorce agreement stipulates that they could live in the house until a certain date and then house is to be sold. They also added the option to buy me out as I wasn't living in the property. So roll forward a couple of years and they've moved away and I'm back in the house with the children. As I have no court ordered option to buy them out I think CAT and stamp duty is payable if I do. I'm trying to figure out how to calculate what would be due.
  • If property was bought for 250k and is now worth 400k is the CAT charged on the uplift in value or on the full value?
  • Is it the case that I only pay CAT on "my half"?
  • There is a mortgage on the property. Is that factored in? I'm assuming not.
 
Sorry now, I am not quite sure of your question but you might be confusing CGT ( Capital Gains Tax) with CAT (is capital acquisition tax - gifts/inheritance).

You & your ex bought the house for €250k, the ex is moving on & you are buying their half share. So you only pay CGT when you dispose of an asset. You don't have CGT liability but they might (but depends on PPR relief etc. )

If your ex is selling their half at market price to you there is no 'gift' thus no CAT. For example if your deal with the ex is they want €200k (50% of €400k then there is no CAT) and they will then pay off their half of the mortgage with their proceeds, you don't have a CAT liability.

If however your deal with the ex is they want €150k and they will then pay off their half of the mortgage with their proceeds, then you do have a CAT liability, as they have given you a gift of €50K (€200k less €150K), which you roughly have a €10K CAT liability ( €50k less class c threshold of €20k = €30K @ 33% tax rate = €10K).

BTW the mortgage has nothing to do with the tax liability, as mortgages are only how you paid for the house.
I hope this helps.
 
@HappyLuck thanks a million. The CGT part was easy but for the CAT I was trying to figure out how revenue could deem my half of the house a gift.

So am I correct in thinking then that the only liability is stamp duty and I only pay that on my half? So 1% of 200k = 2k
 
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Yes you will have to be pay stamp duty on the conveyancing of the property but there maybe some reliefs, you need to tell your solicitor loads of detail, I am not familiar with stamp duty but check the out below.

ww.revenue.ie/en/property/stamp-duty/exemptions-and-reliefs/transfers-between-former-spouses-and-former-civil-partners
 
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