Holiday home’s inheritance and CGT

Hello all,

Myself and two sisters where supposed to inherit a family holiday home in Ireland, as per my mothers wishes when she passed. However it has transpired that my father is also named on deeds in joint ownership, so it has passed directly to him. He intents to carry out mams wishes by selling property and gifting equal parts to us as part of inheritance. The accountant has advised says he will pay CGT on the property and only the remaining balance will be divided.

My question is what if he gifted the house to us directly, as an inheritance, so it comes out of our threshold, would that mean we would pay CGT individually if we were to sell in coming years?

For example, if house is worth 300k and it was gifted to us and sold, each of us would get approx 100k excluding any fees. Well under inheritance threshold. But are we still liable for CGT on sale as the asset was worth 300k when it was gifted to us and therefore no gains have been made?

If he sold it and the original purchase price was 200k. He is liable for 33% on the 100k gain, leaving us with 89k each.

We are just looking at the most tax efficient way to dispose of the asset.

Just to be clear it has been in family ownership for 20 odd years and is not main residence and there are no other assets from will.

Newboy said:

My question is what if he gifted the house to us directly,

Click to expand...

In this instance your father would still have any CGT liability based on the market value of the house.

See below from Revenue...

When do you use market value?​

You will need to use the market value of the asset to work out your chargeable gain if:

• it was a gift to someone other than your spouse or civil partner
• you sold it for less than it was worth to help the buyer
• you inherited it and are now disposing of it
• or
• you bought it before 06 April 1974.

If your father gifts the property to you he is disposing of it and he is liable to CGT. Because this is a transaction between related parties his CGT liablity will be calculated, not on the basis of the actual disposal proceeds (nil) but on the basis of the market value of the property.

So he'd have the same CGT liability as if he had sold the house on the open market.

You would be treated as acquiring the property at its current market value, and in later years when you dispose of it you would be liable to CGT on any gain over that deemed acquisition cost.

"If he sold it and the original purchase price was 200k. He is liable for 33% on the 100k gain, leaving us with 89k each."

@Newboy,
If he jointly owned it with his wife (as you suggest above) this isn't fully correct.
He will have acquired a half share on the original purchase.
He will have acquired the second half share on the death of his wife, at the open market value on that date.

You should get proper professional advice on the CGT position here, to save him possibly overpaying CGT.

Ah great, thank you all for your replies. I never realised as he is named on deeds and already owned a half share, he possibly is only liable for CGT on half the uplift.

There is no advantage in his gifting the house to you and you selling it. Probably just more legal fees.

The only way to avoid CGT is for him to hold onto it until he dies. CGT liabilities disappear on death.

So if you plan to hold onto the holiday home, he should not transfer it to you now as it creates an unnecessary CGT liability.

Brendan