being given a house....

B

babygirl

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i am a 24year old single mother on lone parents allowance and am living at home in my parents new house as i just recieve 225 aweek. they have offered to sign over the old family home (empty for 18months) worth about 90k.

  • will i have to pay some kind of tax or stamp duty?
  • is it a long and expensive process?
  • what is involved in siging over the house?
i cant see my 2 brothers ever having a promblem with it in the years to come as 1 will recieve a very large house worth 400k and the other quite abit of land in different areas when my parents pass away.

i have seen other threads saying it is easier to wait for a will but im my case that could be over 30 years away and i will be living in the house for life so it makes sense that i fully own it from when i move in eg. if i wanted to re morgage it for renovations in afew years.
 
no the house is currently empty and i am living in my parents larger home with them. the old house needs new windows, heating ...etc that im in the process of sorting out and paying for myself
 
If you are a first time buyer you will not have to pay any stamp duty. If the value of the property and any other gifts inheritances you have already received does not exceed in the region of €450K you probably won't have Gift Tax. Your parents may have a CGT liability - they would need specific tax advice on that issue.

Your parents need to talk to their own solicitor. You need a different solicitor, ideally.
It can be done within a matter of days if the Deeds are available, the tax situation is clear and the parties are agreeable.

You will both have legal fees.

mf
 
thanks for your reply
dose CGT mean that my parents might have to pay a tax for giving me the house?
that seems odd to me but i dont unerstand anything to do with legal stuff
 
babygirl said:
thanks for your reply
dose CGT mean that my parents might have to pay a tax for giving me the house?
that seems odd to me but i dont unerstand anything to do with legal stuff
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They are disposing of an asset. The valuation of the property by Revenue will be the market value of the property - it does not matter that it is a gift.

It is important that you and your parents take proper advice so that you all understand the tax and legal implications of the transaction.

This is a significant gift to you and disposal by them.

mf
 
babygirl said:
no the house is currently empty and i am living in my parents larger home with them. the old house needs new windows, heating ...etc that im in the process of sorting out and paying for myself
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The reason I asked was; if you are living in the house for 3 years prior to receiving the house as a gift, you will be exempt from Capital Acquisitions Tax (CAT) via a relief known as dwelling house relief.

There are 3 types of taxes that are potentially involved in receiving a gift.

CGT - Capital Gains Tax 25%
CAT - Caital Acquisitions Tax 25%
SD - Stamp Duty 9%

The ones that concern you are CAT and SD. But as I said, if you live in the house for 3 years prior you'll be exempt from CAT and if you are a first time buyer you will be exempt from SD.

That leaves CGT for your parents because when they gift you a house, the revenue deem that to be a disposal of a house i.e. they sold a house/asset. If the house is not your parents principal private residence then they would have to pay CGT on the profits from the sale of the house. This is calculated by taking the cost of the house when it was bought, adding inflation to give an idea of what the house is worth in todays money and taking that away from what the current value of the house is and then taxing it at 25%. Sounds complicated but it's not and the tax may not be that much. It's actually good tax planning to pass on assets to children in a depressed market.
 
censuspro thanks for that information.

the house is actually a bought out concil house that was bought for £9000 24 years ago and would be worth around 90k now

would CAT tax be calculated in the same way? i havent being living in the house for the last 3 years so i will have to pay that aswell.
 
babygirl said:
censuspro thanks for that information.

the house is actually a bought out concil house that was bought for £9000 24 years ago and would be worth around 90k now

would CAT tax be calculated in the same way? i havent being living in the house for the last 3 years so i will have to pay that aswell.
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No, CAT works differently. You parents may gift you assets or cash up to a value of €542,544 without paying any CAT. However the threshold of €542,544 is a life-time threshold which means that if your parents gifted you the full €542,544 in 2010 and in 2011 they gave you another €50,000. Your threshold would have been used up by the previous gift and you would be liable for CAT on the €50,000.

In your case though, if your parents have not given any previous gifts greater than €542,544, you will not have to pay CAT on the gift of the house worth €90K.
 
would the best approach not be to live in the house for 3 years and then have your parents gift it to you?
 
from what censuspro has said i would not have to pay the CAT tax as the house is only worth 90k so it dosent make a difference if i did live in the house for 3 years first or not.
my parents would still have the CGT tax
 
babygirl; the house is actually a bought out concil house that was bought for £9000 24 years ago and would be worth around 90k now [/QUOTE said:
I am aware that house prices have dropped but a house in Ireland today for under 90,000 seems unbelievable cheap.
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well its in a concil estate in a small town. it hasnt actually being valued i just look a guess but a neighbours house afew doors down is on the market for 110k and in a brand new estate in town the houses are on the market for 159k and ours is in a total need for renovations ie. everything is to be replaced which i expect will cost about 15-20k but its really exciting getting to choose everything

the reason my parents are giving me the house is because iv being on the waiting list for a 2bed concil house 4 over a year while theres 3 3 beds sitting empty for over 2 years but i was told that i would have to have another child before i would get 1. the funny part is theres only 2 or 3 2 beds in the whole town while are occupied by young families so i would be waiting years
 
Hi Babygirl,
Do get some advice on this because if I am reading your post correctly this house used to be your parents principal private residence therefore as far as i know they would be exempt from CGT for the increase in value for the period that the property was their PPR. An accountant or a solicitor more familiar with cgt comps would be able to calculate but their liability should be quite small I would think.
 
amc123 said:
Hi Babygirl,
Do get some advice on this because if I am reading your post correctly this house used to be your parents principal private residence therefore as far as i know they would be exempt from CGT for the increase in value for the period that the property was their PPR. An accountant or a solicitor more familiar with cgt comps would be able to calculate but their liability should be quite small I would think.
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That is the case. Plus the first 12 months after it was their ppr is exempt. If, for example they bought it 24 years ago lived in it for 11 years, then only half of the gain (12/24) is taxable. There also used to be a multiplier allowing for inflation, but I don't know if you can benefit from that. The liability could be minimal.
 
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