Buying a house from family member for less than market value

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t3r35a

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My aunt has a house that was valued at 190,000 she said she would sell it to me for 100,000. It is a vacant house that hasn't been lived in in 15 years so will need a lot of work.
Would i have to pay much tax on it as its under market value
 
Surely you mean will she have to pay much tax on it since she's the one selling it? Even if she sells it at a discount any tax issues against will be calculated with reference to the fair market value and not why discounted selling price. This includes CGT that she may be liable for and stamp duty that you may be liable for on the purchase.

What is the history of her ownership of the property? When did she acquire it? Did she ever live in it? Was it ever rented out? Does she own another property that she lives in?

Since it has been vacant for 2+ years prior to sale then it may qualify for the Vacant Property Refurbishment grant.

Vacant Property Refurbishment Grant

www.gov.ie www.gov.ie
 
She has owned it for 30+ years. No it was never rented, she was allowing her brother to live in it rent free. She does not own the property she currently lives in, she lives in her parents house.
 
There are two issues here.

For you, there is the issue of Capital Acquisitions Tax, also known as Gift Tax.

For your aunt, there is Capital Gains Tax.

I am not a tax expert and your aunt should go to an accountant for tax advice before actually making the gift.
 
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Let's start with your aunt.

She is selling a property worth €190k.
If she has had it 30 years, she probably paid €40k for it.
So she will be liable for tax on the increase in value.
€150k@ 33% = €50k.
 
You have a liability for Capital Acquisitions Tax.

You are getting a gift from your aunt of €90,000 - the difference between the price you pay and the value of the property.
Over your lifetime, you are allowed up to €40,000 tax free from your aunts and uncles.
So if you have not received any other gifts, you would be liable for Capital Acquisitions Tax of 33% of the excess over €40,000 or €50,000 @ 33% = €16,500

However, as the Capital Gains Tax and Capital Acquisitions Tax arise from the same event, the gift of the house, you will get a credit for the CGT paid by your aunt.

So you will not have any liability.
 
But, if the house was your aunt's principal private residence for some of the time she owned it, so she pays reduced , then the credit avaible to you will be correspondingly reduced, and you will have a CAT liability.
 
t3r35a said:
My aunt has a house that was valued at 190,000 she said she would sell it to me for 100,000. It is a vacant house that hasn't been lived in in 15 years so will need a lot of work.
Would i have to pay much tax on it as its under market value
Click to expand...
A current valuation might be worth obtaining if it's likely to make any difference.

It might be worth getting a full and fresh estimate of the likely remediation costs in advance of the valuation as this total should impact on the applicable valuation.
 
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