Tax on free use of property

B

Bagginsbilbo

Registered User
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Hi folks

A little dilemna and looking for thoughts on scenario below

Aunty very ill in nursing home, will not be returning home, aunties house is lying idle and lately falling into disrepair, graffiti appearing on front wall of house etc so serious concerns about break in/vandalism, aunty has asked her niece to move in and mind property along with her partner as niece had been house hunting so in theory a win win for both but here’s where it gets complicated

Aunty does not want money for niece to live there rather to take care of house pay for bills and general upkeep also aunty expressed the wish to will house to her niece on her passing, niece is very grateful to aunty for her offer but is concerned about tax bill for living rent free, the niece also may apply for dwelling exemption in the future if timelines warrants it as in she lives in house 3 years prior to aunty passing but she is very concerned that revenue will come back with ‘’ you’ve been living in property for x number of years rent free give us our money’ the house is very old and very large and in a good area so in theory rental yield on house could be huge however the house is not presently in rentable condition as no central heating no fire safety etc etc so at moment nobody would rent it, if niece moves in niece would plan to spend approx 10000 doing up a few rooms and improvise with electric heaters etc.

How the hell would the above be viewed by revenue? How would she get a definitive answer on above? Is she best walking away from it all together to avoid a huge revenue bill down the line?

Thanks for reading
 
Hi , I would agree with Gordon.. if Revenue did come a knocking in the future.. I would advise niece to take photos of the state of disrepair of property before she moves in and to then document and receipt all expenditure items.. put them in the proverbial cardboard box for safe keeping. In that way she will be well able to argue her case!
 
If Aunties stay in nursing home is being paid for by Fair Deal scheme you should check to make sure that they have no problem with it. I know that if rent was paid the HSE can claim some depending on your aunts financial circumstances.
 
Thank you all very much for the replies, I think she’s going to go for it and keep a record of everything that’s spent
 
I had this with a client before. There is a formula for calculating the tax due:

Market Value of Property * Factor for a male/female and the relevant age, less small gift exemption, less group threshold * 33%. Can't paste the table on here from the email I was sent.

I was told that in practice arrangements where family members are living tax free are not returned to the Revenue.



Steven
www.bluewaterfp.ie
 
Hi Steven thank you for your reply, can I clarify this paragraph ‘’I was told that in practice arrangements where family members are living tax free are not returned to the Revenue’’ what does that actually mean?

Thank you
 
[broken link removed]

Hello please see link above re free use of property..

The reference that’s think Steven was making was when a life interest is granted on a property.. they are a legal rights .. see attached .. a right to reside is not the same as a life interest..


[broken link removed]
 
Bagginsbilbo said:
Hi Steven thank you for your reply, can I clarify this paragraph ‘’I was told that in practice arrangements where family members are living tax free are not returned to the Revenue’’ what does that actually mean?

Thank you
Click to expand...

Nobody notifies they revenue. they just live in the house and say nothing.
 
Mary thanks for that, so there is indeed a formula to work out the tax in these circumstances, I think it will come down to her taking a risk, she will keep records etc but it looks like based on that link they could bill her so it will come down to the state of property and her arguing her case that the house wasn’t market suitable to rent, if the property was in good nick the rental yield on it per annum could be approx 50000 so that’s why she’s worried!

Also in terms of not declaring that she lived there rent free, if she applies for dwelling exemption in the future she I imagine would be audited by Revenue at that stage and that’s when they will see she lived rent free so she wipl have to be upfront on that.

I have advised her to seek professional advice but I think she’s going to go for it, I wouldn’t be 100% myself that she can avoid the rent free tax bill.

Many thanks again folks
 
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