Buying Wife's Family Home - Tax Advice

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wizabit79

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Hi, my wife and I will be purchasing her old family home and I am looking for tax advice regarding the purchase. The price of the house is €450k and this is to be split evenly between my wife and her two sisters who inherited the house. I am aware that my wife can obtain her portion of the house as a gift, however, as it is a joint mortgage application I would like some information on how to approach the purchase in order to avoid a huge tax bill. I have heard of other cases whereby only one name goes on the deeds in order to avoid a hefty tax bill, however, not sure how lenders would view this when applying for the mortgage. Any advice on this would be greatly appreciated.

Regards,
 
I don't see any tax implications if you are buying the house at market price.

There are two events here.

1) Three people are selling a house for €450k. They are inheriting €150k each which is well below the parent to child exemption, so if they did not get substantial other inheritances or gifts no tax due.

2) You and your wife are buying a house for €450k. As it's the market price, there are no special tax consequences.

3) If the house was valued for probate at €400k and has increased to €450k by the time of the sale, the Executor or the three sisters will have a CGT bill on the increase in value. But that applies irrespective of whom they sell the house to.

I don't think that there are any tax planning opportunities e.g. Selling the house for less than market value. The market value will be used in all tax calculations. And if it's sold at less than market value, you and your wife would be deemed to be getting gifts from the other two. So avoid.
 
The issue as I see it is that the OP and their wife wish to purchase the remaining shares in a property, of which the wife already owns a one-third share.

I'm sure a competent solicitor will be able to craft a suitably-worded contract to reflect this.

The likely tax scenario is as Brendan outlines and appears straightforward, except that the sister who is retaining her one-third share won't be facing a CGT bill on that bit of it because there is no disposal of that bit.
 
It isn't clear who is selling the property - is it being sold by the executor or is it being sold by the sisters after they inherit the property?
 
jpd said:
It isn't clear who is selling the property - is it being sold by the executor or is it being sold by the sisters after they inherit the property?
Click to expand...
I think that's the sort of tax planning the OP was asking about.
 
Thanks for the responses all. It is the three sisters who are selling the property.

So am I correct in thinking as my solicitor should be able to work it that my wife has 1/3rd share of the house price as a gift and the remaining 2/3s value of the house are split 50/50 between us? Are lenders usually okay with this when approving for a mortgage?
 
My take.

I think that Una, Frances and Olive own a house.
It is valued at €450K.
Una and her husband, John, want to buy out Frances's and Olive's share for €300K - that is €150K each.

So- the Contract is between Una and John as Purchasers and Frances and Olive as Vendors.

The Deed to effect the transfer of ownership will record that Una already owns one third and that Frances and Olive
are selling their two thirds share to Una and John.

The Deed will also record that Una is vesting her one third share in the joint names of herself and her husband John.

Una and John will have a solicitor- Frances and Olive will have a different solicitor.

The lender should have no difficulty with any of this.

The tax implications, as discussed, above may arise if there is any element of gift or gain by Frances and Olive.

mf1
 
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