Giving House To Daughter...

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colin_hanley

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Hi, many years ago I bought my family home from my siblings after our mother died, I've been letting my elderly sister live there for several years now as she has no home.

Unfortunately it looks like my sister shall be going to a nursing home soon. I'd like to give the house to my daughter, as herself and her family have no realistic opportunity to get on the housing market. I was planning to will it to her, but would prefer her to get it now so she can at least get herself on the property market and save all the rent herself and husband pare paying now. It's not in an ideal area, so I expect she'll probably want to sell when her children get a bit older.

Is there a standard process for a person to give a house to another person without selling ? Would there be tax liabilities when I hand over house ? If my daughter sells down the road does she have to pay any specific tax because it was gifted to her ?

The house is worth approx 350K.

Thanks,
Colin
 
Hi,

Below is my understanding, and shouldn't be treated as Tax advice.

Unfortunately there are tax implications here. I'll go through what you've laid out, and maybe someone else could suggest a different way to approach. Currently the only real way of passing a house to a child is on your death, if it was your principal residence, and the child has lived there and retains it for a period after inheritance.

Firstly on your side:
If the value of the property has increased since you purchased / inherited it, you will be liable for Capital Gains Tax (CGT) on the increase in value / amount paid. Even though you are gifting it, Revenue will deem that you have disposed of the property at market value.

On the Transfer, your daughter will have to pay Stamp Duty, again based on the market value.

From a Capital Acquisitions Tax (CAT, or Gift Tax) standpoint, your daughter can receive up to 310k tax free from 'Group A' disponers. This was increased from 280k in the last budget, and is a political hot point at the moment as most individuals who inherit family homes are caught paying tax, but whether it's worth waiting to see if there are any increases in the budget again this year is another question (it was 540k up to 2009). This is a lifetime limit, so any future inheritances from a 'Group A' disponer would be subject to CAT.

The current rate of CAT is 33%.

It is very important that you transfer the house to your daughter only. If you transfer it 50:50 to her and her partner/spouse, the partner is in 'Group C' so will pay CAT on the value above 16k.

If your daughter later sells of the house, so long as it is her Principal Private Residence, she will be able to benefit from relief from CGT on any increase in value.

Alternative:
If the house is not in an area your daughter wants to live, you might be better off selling it and gifting / loaning her the money to buy a house where she wants (and you'll have funds to pay your own CGT liability, if any). You will still have to pay CGT yourself on any gain, and she will pay stamp duty on a purchase. There may be easier ways to structure a loan without triggering a CAT liability on your daughters part.
 
Hi
I want to gift my house to both my daughters. Do they have to be over 18? (one is). Will this allow 320k (2019 budget) for each child? House is only worth 350-380k. Or should I gift to only one, pay the 1% stamp and then 33% over the 320k? I bought for 550k in the boom. What would solicitors fees be like for this?
Thanks
 
If your daughter lives in the house for 3 years prior to the gift she will become exempt.
I believe she then has to reside there for a further 6 years.
 
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