Query on CGT owed on 50% of house transfer

S

Seastheday

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Hi all,

My mother in law & I bought a house together many years ago and now she kindly wants to transfer her 50% of the house to my wife as a gift which we are very appreciative of. I believe that from an inheritance/gift tax perspective my wife will have nothing to pay as it is under the €335k gift threshold from a parent to a child.

Am I correct in thinking that CGT is also owed on this transfer as this is essentially a sale as the name on the deed will change from my MIL to my wife. (We will then own 100% of the property)

I am keen to understand if my interpretation on what is owed is accurate and would appreciate any help on the approach and if there is a smarter way to transfer it and minimize tax exposure. I recognize that if we wait until death and transfer it via a Will there will be no CGT but my MIL wants to get her affairs in order and transfer her different assets prior to death which I can fully understand and will most certainly respect.

Note: this is a summer house and not a PPR for either party.

All feedback on the numbers below and current plan appreciated.

1698665879533.png
 
She should deduct the infrastructure expenses from the gain and calculate the CGT on the net gain after the infrastructure.

She should not deduct the infrastructure from the CGT liability.

Brendan
 
Thank you both for the replies.

Yes she is transferring to her daughter so Class A

In terms of the CGT I have amended the table below based on your feedback Brendan. As I was searching different posts here on AAM on CGT I came across a post that indicated that the original solicitor fee for the purchase of the house plus the stamp duty paid on the original sale may be allowable as deductibles given that the 50% transfer from my MIL is classed technically as a sale to her daughter? I assume at best it would be 50% of those costs given the ownership split? Appreciate any thoughts on the accuracy of that. Is there anything else I should be considering?

1698669606186.png
 
You must calculate the gain first. Then split it 50/50
Gain 30,000
Less infrastucture :1856
Taxable gain: 28144
50% 14072
Annual allow 1270
Net gain12802
Taxable at 33%
 
Thank you Brendan.

Any thoughts on whether the original solicitors fees and original stamp duty are eligible deductibles?
 
As your mother-in-law purchased 50% originally, then I would assume that 50% of the original costs will be allowed when calculating the gain
 
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