Query on best way to transfer property from parent to child

Ryback

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Hi there, would really appreciate a steer on the best way to do this.

My situation is as follows: My mother owns a 2nd house, which had become dilapidated. Myself and my wife have been renovating it and making it liveable for about the last 3 years.

My mother wishes to transfer the property to us. We've agreed an arrangement with her where we will pay her €240k for it over a period of years in monthly installments.

With all the work done on it, the market value is likely presently in or around 300k, so below the gift tax threshold (or if over, not by much). Should obviously have sorted all this out before renovating, but too late for that now.

I don't want to take liberties tax-wise, but if there are more efficient ways to present this transaction to Revenue, I'd obviously prefer to do those.

I think I see two ways it could be done:

1. My mother gifts the house jointly to myself and my wife, and we "gift" her money for it on a monthly basis. I feel like this might create a gift-tax liability for my wife though, couldn't find any info on that. I think the payments to my mother would also create a gift tax liability for her too, is that right?

2. We draw up a formal loan agreement where my mother gives us the house, alongside a notional "loan" of 240k which we repay in monthly installments. I presume this means we would only be receiving a gift of the difference between the market value and the loan amount, so say 60k. I think there would also be an amount of tax due on the interest that would have been received by leaving the loan amount on deposit, but it looks like the best AER that could be achieved is only like 0.3% at present, and thus below the €3000 per year tax-free gift amount.

It seems like 2. is the better way to do it. Is that above board?

Or is there something altogether different that would be more efficient all around?
 
You can receive 335k from your mother but your wife can only receive 16.5k as she is considered a stranger. It would appear from your post that your mother wants to sell the house to you - I don’t know how the loan would work but she would certainly be liable for CTG.
 
Are you sure about the CGT liability for the wife?

Like if the house is gifted to me, there's no liability below 335k. If I then went on to gift 50% ownership to my wife the following day, there's no liability to her as spouses don't incur it...

...but if it was gifted to use jointly then there is a liability to her?

Seems like we'd end up in the same place, but just have to pay extra solicitors fees for another conveyance to get there in a way that avoided CGT in that scenario. I'm not going to assume Revenue aren't prone to silliness...but it does seem silly.

> I don’t know how the loan would work but she would certainly be liable for CTG

So you think my wife would still be liable for CTG on the difference between the house market value and the loan amount in that scenario?
 
You're mixing up CGT and CAT (gift tax).

Are you sure about the CGT liability for the wife?
Not for your wife. CGT will be due from your mum, regardless of whether she gifts it or sells it to you. But that's only if the value is more than at the time she acquired it.

If she gifts it to you jointly, there will be a CAT liability for your wife. So if there's a gift, your mum should gift it to you only. Once in your name, it's a very simple process to then put it into joint names with spouse, especially as there's no mortgage involved.

But if you're buying it from your mum, with a loan from your mum, then CAT only looks at the difference from market value and value you purchase it for, and the gift of the interest free element of loan.

If you and your wife have spent money bringing the house to habitable condition, it should be possible to factor that into the calculation.

Stamp duty will be due on the full market value.
 
The fact that the house is not your mother’s main residence would likely give rose to a tax liability
 
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