Sounds, to me, like there's a potential gift tax issue there alright. I'm not a tax expert though.i'd say the house was worth at the time about 350k and we paid 200k
There is a healthy debate (see thread above) as to whether you are liable to pay CAT on the difference between market value and transaction value.i'd say the house was worth at the time about 350k and we paid 200k
That debate is subtly different from the latest query. In the original query, a totally unconnected stranger in an open market agreed to a particular sale price with the purchaser. I queried the suggestion that the apparent discount on the anticipated market value represented a taxable gift on the part of the vendor.There is a healthy debate (see thread above) as to whether you are liable to pay CAT on the difference between market value and transaction value.
Agree.For sure the vendor should have used the market value if there was a capital gain on the property and it wasn't their PPR. But that is their business, not yours.
Hello, we are in the fortunate position of being offered the opportunity to purchase our first home below market rate from a friend of a friend. They just happen to be very considerate people and see it as being way over valued due to the housing crisis! They did have it valued and its being offered to us, off market for about 35-40% below perceived market value. We are not related in anyway.
Not quite.a totally unconnected stranger
They are within the OP's social circle and considerate to the point where they will give them a five- to six-figure discount on a house.to purchase our first home below market rate from a friend of a friend. They just happen to be very considerate people
Motive.How does the donor being a "friend of a friend" or "a family friend" make any difference ?
Unless they are parents, grandparents, siblings or nephews/nieces, the donor(s) are in category C
No point in rehashing old ground here, but there's no indication from the OP that the vendors are within the their social circle.Not quite.
They are within the OP's social circle and considerate to the point where they will give them a five- to six-figure discount on a house.
I am not sure how Revenue would be supposed to know the difference between a "family friend" and a "friend of a friend" in the circumstances, or how on earth a taxpayer would prove the difference. These definitions are pretty subjective and unfalsifiable. If I worked for Revenue the circumstances of the two transactions would look identical to me.
that the vendors regard the true value of the house as at or around its asking price... and see it as being way over valued due to the housing crisis! They did have it valued and its being offered to us, off market for about 35-40% below perceived market value.
It doesn't matter what the vendors perceive as the true value of the house - what matters is what Revenue perceive as the market value of the house
Which would be to all intents and purposes identical in Revenue's eyes. Two parties with a social connection trading a property at a below-market price with full knowledge. The motives of the vendor in either case are impossible to prove or disprove.It would the facts of each case that would be the determining factor.
Which would be to all intents and purposes identical in Revenue's eyes. Two parties with a social connection trading a property at a below-market price with full knowledge. The motives of the vendor in either case are impossible to prove or disprove.
If the vendor can coherently justify the price they're charging, then data relating to other properties is neither here nor there.And I would imagine that the Revenue have plenty of data to determine what the market value is likely to be and what the likely variance from the average market value of similar properties in the same area - a 30 or 40% discount is bound to raise suspicions
Who advised you originally and what did they advise?Looks like we have a big prob. I thought that our case was very similar to the original case for a number of reasons. I don't really understand why different advise is now been given.
I thought that our case was very similar to the original case for a number of reasons. I don't really understand why different advise is now been given.
I think the best thing for me to do is to talk to an accountant. I will also talk to the vendor. Hopefully, he can justify the price he sold us the house for.
Comments here do not constitute advice and never should be relied upon as a substitute for professional advice.Looks like we have a big prob. I thought that our case was very similar to the original case for a number of reasons. I don't really understand why different advise is now been given.
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