Capital Acquisitions Tax:

[Mir]

Hi, interested in knowing if this applys to unmarrieds who both own house, one signs over his rights for an amount less than 50%. How do the revenue then calculate the CAT due on the share the other has been given? Is is 20% of the value of the share given (50% - x amount bought out for)?

At what point do you have to pay this, is it on the sale of the house?

 

[ClubMan]

How do the revenue then calculate the CAT due on the share the other has been given?

They don't - CAT is an self assessed tax so it's up to the taxpayer to calculate it and submit an accurate returen/payment. Where assets are transferred as a discount to the fair market value taxes such as CAT and CGT etc. are calculated on the higher FMV. Failure to do this on a self assessed return is tax evasion.

 

[Mir]

Thanks for reply Clubman.

Is it CAT or stamp duty that applies if I gain a share in a property? Bit confused on this.

 

[mf1]

"Is it CAT or stamp duty that applies if I gain a share in a property? "

It could be both depending on the amounts involved and the stamp duty status of the person taking the gift.

mf

 

[Mir]

"Is it CAT or stamp duty that applies if I gain a share in a property? "

It could be both depending on the amounts involved and the stamp duty status of the person taking the gift.

mf

Thanks MF1, if it's a share less then the stamp duty threshold then I don't pay stamp duty, is that right?

Then only CAT applies on the value of the share..?

Share would be worth 60k, so is it 20% of 60k which would = 12k

 

[MOB]

There is a 'threshold amount' which is a bit like a lifetime tax free allowance for gifts and inheritances. There is also an annual small gifts exemption. You pay 20% on the excess.

If you live in the house, own no other house and meet length of ownership criteria, you should not be liable to gift tax anyway.

The solicitor instructed in relation to the transfer\buy-out should be able to give you comprehensive advice, specific to your circumstances.

 

[Nige]

If you live in the house, own no other house and meet length of ownership criteria, you should not be liable to gift tax anyway.

This was changed by the 2007 Finance Act. A gift of a dwelling house will no longer be exempt if both disponer and recipient were living in the house, unless the disponer was elderly or infirm and needed the other person there to help them.

However, the exemption still applies to inheritances where both parties lived in the house.