CAT Advice - Not Straight Forward?!

J

Jim2017

Registered User
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Hi,

I am new to this forum so any guidance is very much appreciated.

My mother intends to gift the family home to me, surrounding acre and excess land of 2 acres. For the gift I must pay a consideration while also committing to build a small house on the land for my mother to live in for the rest of her live. I am wondering along with the consideration I will pay her can I also deduct the cost of building her the house against my CAT? I would intend giving her right of residence on the house I build. Also after she passes would I be liable for CAT on the full value of the new house or just the value of the right of residence?

Thanks
 
Thanks for reply. You can say she is selling it or it's part gift / part payment. The market value of the house and surrounding 1 acre is 450,000. The excess 2 acres is valued at 125,000. If she is to sell the house to me for 450.000 I could not afford to build her the small house or put any money towards refurb of her house.
 
Thanks for reply. You can say she is selling it or it's part gift / part payment. The market value of the house and surrounding 1 acre is 450,000. The excess 2 acres is valued at 125,000. If she is to sell the house to me for 450.000 I could not afford to build her the small house or put any money towards refurb of her house.
 
As dub_nerd said it's not a gift.

If she sells it to you at below market value, the discount amount would be treated as a gift. That's the most straight forward way to deal with it - sell it to you for the amount it will cost her to build the house.

If she transfers the 2 acres to you, it will trigger a capital gains tax on her side as I'm assuming she didn't pay 125k for it originally.

Leave the 2 acres (or at least the site for house as I'm assuming the residual would have a lower value) in her name, and build the house in her name.

It will be liable to CAT if you inherit it in the future.
 
The intention is for me to own the entire property and I want to avoid a second CAT payment down the road, additionally any second CAT payment will be more in the future if a house has been built versus the value of the land right now without the built house.

Also I believe if she uses the funds from the sale of the house it can not be put into my name, my understanding is that I have to build the house with my funds.

Regarding my previous question, if I was to build the house for her and grant her right of residence or a life interest, can I offset the cost of building the house against my CAT? When she passes do I pay CAT on the value of the new house or the value of the right of residence? I am assuming I will pay some CAT initially on the main house and surrounding excess land.
 
You should get expert tax and legal advice on this.

The market value (free of any obligations) is €575k. But you're going to pay something and provide your Mum with a house. Right of Residence, Dwelling House Exemption, CGT, CAT, Stamp Duty, what else you might inherit, future moves in CAT thresholds...all of these are relevant.
 
Thanks for response. Either way there will be CGT and CAT so I just hope we structure it in the right way that is efficient for both parties while ensuring tax compliance.
 
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