mister mac
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Been researching this but unsure of correct answer. House bought 35 years ago for 6k, parents lived in it for 4 yrs then moved out. Their son living in it since then, parents now want to gift it to him. Solr says approx 60k will be due in gift tax. Current value of house 240k or so? Anyone confirm that solr is definitely correct and care to explain exact calculations? Thanks.
There are a number of exemptions in the CAT code - Gifts / inheritances and one in particular relates to "Principal Private Residence" whereby the gift or inheritance of a dwelling house is completely exempt from tax provided the Beneficiary of the gift or inheritance has occupied the dwelling house, as their only or main residence, for a minimum period of three years prior to the date of the gift. In the case cited above, I believe the person in question would be completely exempt from CAT gift tax.
In relation to Capital Gains Tax, I'm wondering if it would be wise to pay out such a large amount of tax to facilitate transfer of the house to the son. I agree the CGT would be about 60K based on the figures provided
Dont forget that there would also be stamp duty payable at the rate of 1% on the gift.
The owners should consider instead, bequeathing the property to their son in their will(s) in which case there would be no Capital Gains Tax payable, no stamp duty payable and no CAT (Gift tax) tax payable. Presumably the Solicitor has already pointed this out. The son could continue in the house until his parents have died and then inherit the house without any liability to tax of any kind
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