Buying a property at a discount from my granny

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Orient

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My grandmother owns 2 houses she purchased house A as an investment in 1996 for 85k and rented it out for a few years.
I have lived in house A since 2015 while going through a divorce I got full ownership of my own property in 2020 in the divorce settlement but due to my children's schools I rented out that house from 2020 to 2024.
My Grandmother wishes for me to have house A and buy her other grandchildren out.
I intend to sell my own home to do this what is the most tax efficient way.
Also when I moved into the house it was in need of renovation which I completed to a high standard however banks or companies I used no longer have the records of these.
House is valued 550k
Renovation 90k
Any help on most efficient way to do this most appreciated
 
Is the plan that you acquire the house now, or that you acquire it at some date in the future when your grandmother dies?
 
It seems clear that you intend to do this now before she dies?

1) Sell your own house. Assuming it has increased in value, you will pay Capital Gains Tax as it was not your Principal Private Residence since 2015. Was it was your spouse's home while you were not living in it? Not sure how this is treated from a CGT point of view.

2) From your granny's point of view.
She bought a house for 85k in 1996.
Assume that was IR£ so the equivalent would be £IR85k *1.26 = €107k
You are allowed to increase this by a further 1.25 for inflation, so her allowable cost is €134k
She is disposing of it when it is worth €550k
So her capital gain is €416k
Can she claim that she spent €90k renovating it? She will need to talk to a tax advisor about this.
From her pov, assuming the renovation is not allowed for CGT purposes, she has a capital gain of €416k and so will pay 33% CGT or €137k

Note: If she does it after she dies, the liability for CGT disappears. So it might make sense to wait until then.

3) I would claim the €90k as a loan from you to your Granny and therefore she owes you the money.

4) So the amount to be distributed to the grandchildren is €550 - €90k = €460k.
Orient said:
My Grandmother wishes for me to have house A and buy her other grandchildren out.
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How many grandchildren are there in total?

5) Let's say that there are 10 grandchildren.
The best way to do this is for you to buy the house from your granny for €460k less €46k = €414k

6) Let her then give the money to her other grandchildren as she sees fit.

There is a bit more planning to do here. How many siblings do you have?
 
Thank you for the replys
We have now decided to explore just me taking ownership of the house as it does not appear to be any benefit in implicating my siblings.
Is it more beneficial for her to gift me the house or me to buy it off her below market value at 300k ?
Also does this affect any fair deal scheme if she needs it in the future ? She's in full health now but who knows
 
on Fair Deal, yes it will have an impact as they can look back at any asset disposal over the previous 5 years and build them into their calculations
 
On the CGT issue. About 3 years ago my parents sold their holiday home that was purchased way back in the late 1970s. Over the years they spent quite a bit of money improving it but never kept receipts (paperwork is not their strong point). When it came to selling the property I had a conversation with a tax account friend of mine about this issue. He advised that if there were no receipts it would be difficult (impossible) to convince the Revenue that this could be deducted from the CGT bill.
 
LondonIrish said:
He advised that if there were no receipts it would be difficult (impossible) to convince the Revenue that this could be deducted from the CGT bill.
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Just to be pedantic/accurate ... allowable expenses aren't "deducted from the CGT bill" but are used to increase the effective acquisition cost before calculating the taxable gain and calculating the tax due.

How to calculate CGT

This page explains how Capital Gains Tax is calculated
www.revenue.ie www.revenue.ie
 
Thanks for the responses obviously because I'm a grandchild the cat threshold is small. Yes I mean not involving my siblings in the transaction. The extention is an obvious allowable expense aswell as adding bathrooms is there a way to stand over the costs such as a valuation for the work carried out ??
 
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