Gifting Property To A Relative. The Pros and Cons.

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Ireland.1

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My in-laws are looking to gift a property to our adult son. The property is valued at 100k.

We believe a valuation of 100k is grossly exaggerated considering the location of the property.

My questions are, what gift/inheritance tax would my son be subject too, if he were to accept his grandparents offer? Who revalues the property?

Very much appreciated.
 
That is probably it.

But it could be the poster's brother in law who would be the recipient's uncle?

Or the brother-in-law's wife who would not be related?

It's better to specify the relationship of the giver to the receiver rather than their relationship to the poster.


Brendan
 
Hi Brendan,

Did the OP not clarify that with his questions?

My questions are, what gift/inheritance tax would my son be subject too, if he were to accept his grandparents offer? Who revalues the property?
Click to expand...

Ireland1: His grandparents may also be hit with CGT as they are seen to be disposing of an asset even if not receiving money for it.

Thresholds for CAT (ie gift/inheritance tax) can be found here http://www.revenue.ie/en/tax/cat/thresholds.html
 
Ireland.1 said:
My in-laws are looking to gift a property to our adult son. The property is valued at 100k.

We believe a valuation of 100k is grossly exaggerated considering the location of the property.

My questions are, what gift/inheritance tax would my son be subject too, if he were to accept his grandparents offer? Who revalues the property?

Very much appreciated.
Click to expand...


I thought you were'nt supposed to look a gift horse in the mouth! Never mind quibbling over the value!

Nobody is obliged to accept a generous (or even a miserable) gift from their grandparents. He can refuse it.

But if he does accept the gift, he can haggle with them as to how much it is worth so he pays less stamp duty and Capital Acquisitions Tax and they pay less Capital Gains Tax. In any event, they should agree on a value that is mutually acceptable to them both supported by an Estate Agents valuation if needs be.

mf
 
With the proviso that its the "market value" not an agreed value as they are connected parties.
 
Yes, it's his grandparents that are looking to gift the property to him. My son is not financially comfortable and we are concerned that the inheriting of this property will add to his current woes.

We have asked his grandparents to try and sell the property and enjoy the rest of their lives but they want him to be the recipient of it.

His grandparents have had a "market valuation" and they have been told the value is 100k.
 
Can they not will it to your son, and hopefully during that "long" period your son's finances will have improved?

S.
 
CAT is payable @ 33% of the amount by which the gift exceeds the threshold for grandparents to grandchild which is €30,150.

This link has most of the details http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

It is a very difficult situation for you if you think the gift is not in the best interests of your son. You don't say how old he is. But at any age he could have a deep resentment if it didn't go ahead over your views however reasonable they are.
 
This scenario is crying out for proper professional advice. Depending on the circumstances, there is bound to be a strategy to organise the transfer properly without a crippling tax liability.
 
I agree with T Mc Gibney that sometimes it pays to get proper financial advice and this is probably such a case.

In general I would say the following.

Direct gifting of the property from grandparents to grandson will possibly give rise to Capital Gains Tax for Grandparents and CAT tax for grandson and stamp duty. There may be some set off allowed between the CGT and CAT on the same transaction but that's another story.

The most tax efficient way for the grandparents to get the property into the hands of the grandson would be by bequeathing the property to their own son in their will(s) and then for their son to gift the property to his own son. By doing it this way they will most likely avoid CGT tax and CAT tax although a small amount of stamp duty (1%) may still be payable in the hands of the grandson.

Its best to consult a professional who can establish what level of gain arises here when the grandparents dispose of the property. My gut feeling is that they may save the bones of 20,000 by handing it down indirectly , on death, as opposed to gifting it directly now
 
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