Capital Gains Tax in property transfer

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pcocp

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OK, I need some advice on the following situation:

Approx 5 years ago, my wife and I wanted to move from rented accomodation and buy a house of our own. We found a suitable house and it looked like we were going to get the mortgage, but last minute problems stopped this and in order not to lose the house, I took out a mortgage jointly with my father, and the house was bought in that way.

Now, five years on, my wife and I are in a much better financial state, and have recently considered moving, but for many reasons we have decided to stay where we are, and to renovate and extend the existing house instead. This is going to involve a remortgage, already approved in myself and my wifes name. So, what I want to do now is transfer ownership and mortgage from myself and my father to myself and my wife.

Is my father going to be caught for C.G.Tax, bearing in mind the following:

It's our family home, he has never contributed to mortgage payments, or any others.
He wont actually gain financially, even though he will be disposing of a valuable asset, i.e there's no money changing hands between us and him.
(He is in agreement with the change in ownership, it was always the plan to do this at some stage.)

So, what position are the revenue likely to take on this?
 
I think he will be liable to CGT on any gain arising based on market values. You would have been advised of this if you had received professional advice at the time of the original purchase.

I would suggest that you reimburse your father for the CGT arising.

Do you have any idea of what the CGT will be?
 
The house has appreciated in value by approx €150K in 5 years. My point is that this is not being done for profit or gain in any way, and he will walk away with nothing.... He is just facilitating us by signing out of the house.
 
Teh CGT is still due to be paid by him.

This shows the importance of getting tax advice before you enter into a transaction, thus being aware of the tax position in advance, and not having it come as a shock at a later date.
 
Your father will be deemed to have made a disposal of his share of the house at market value.The gain is then 75000 *20%
Also stamp duty duty with 50% relief

You will also be deemed to take a gift of the market value less mortgage,though this should not result in a tax bill due to reliefs and CAT thresholds

One option is to leave things as they are as the CGT and stamp duty charges would not arise on an inheritance
 
I feel there is a possibility given the genuine circumstances that your father can execute a deed of trust, indicating that he was never the rightful owner, and held it only on trust for you and that in the circumstances he should therefore not be liable to CGT. Take legal and tax advice.
 
pcocp said:
OK, so be it..... thanks for the advice.
Click to expand...

When I had to deal with my brothers house as his executor - I called to thetax office in Cork and spoke to the officer dealing with CGT and CAT matters - I found them very helpful. It may be worth considering in this case as an alternative approach.
 
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