Buying in-laws house

S

SP2K16

Registered User
Messages
16
Myself and my wife are currently living in her parents house paying them rent. They've agreed to sell the house to us. There's no mortgage on the property. The price agreed is just under market value, I'm not totally sure of current market value but I think it's just a little over what we've agreed.

The advice I'm looking for is what tax if any will my in-laws be liable for? Will myself and my wife be liable for any tax as it's a transaction between family? I understand that the stamp duty we pay will be based on the market value rather than the price we pay.
 
Stamp duty for you at 1% of market value (I'm assuming that the property's worth less than €1m!).

A potential gift tax (CAT) exposure for you and your wife based on the difference between the sales price and market value (subject to applying the Group A/Group C child/stranger thresholds if still available and the €6k Small Gift Exemption for each of you).

Capital gains tax for your in-laws based on the market value less any allowable costs (such as acquisition/disposal costs, enhancement expenditure, and potentially indexation up to 2003) and less their annual exemption. If the property was ever their home, a degree of relief may apply. If they're making a capital loss, the loss will be restricted.
 
Thanks for your reply.

The purchase price is just under €250k so will myself and my wife avoid CAT as it's under the €310k threshold? The market value is under €310k also.

My in-laws lived in the house for approx 8 years until we moved in. Will their solicitor be responsible for calculating any CGT they owe?
 
No, the solicitor won't calculate it. You need to be very careful here re tax. I will post a more detailed answer to help you (when my phone's not at 1%!).
 
Some might disagree, but if it's a reasonably unique property (e.g. not in an estate) and not readily priced by comparing it to a nearby house, and the gap between what you're paying and market value isn't too great, I'd try and find a valuer who's happy to sign off on the fact that the sale is happening on market value.

Failing that, the analysis depends on the level of wealth within her family and the likelihood of you receiving benefits from a stranger.

At €250k and €310k, the gift is only €60k.

How much did it cost them?
 
I'm not sure how much they paid for the house, we're trying to find out. Her parents live in Spain at the moment so we're trying to find out information for them.
The house is in a estate but I think the price we're paying is very close to the market value.
 
They paid €265k for the house, we're buying it for less so would this mean they wouldn't pay any CGT as they're not making a profit?
 
If you're paying €250k, it's all fine. €2,500 stamp duty for you, no CGT for your in-laws, and essentially no capital loss for them to use. No CAT for either of you.
 
We're going to get an estate agent out to value the property anyway to cover ourselves and in-laws. Solicitor will probably need it anyway for stamp duty liability.

Thanks again.
 
You must log in or register to reply here.
Back
Top