Spot on , thanksSibling means brother or sister. I assume you don't mean that when referring to the 'sibling of the parents' in the scenario above but are referring to a (adult) child of the couple. Also, for clarity, there are only 3 individuals involved here - the parents and Child A? Continued references to siblings is unclear, might be worth a re-write.
Yes but I think that won't cover the fact that there is a market rent on the house which is liable for income tax. The taxman wants his tax due on the 6k rental income. It's a tricky one as my first thought was that the sibling can gift each parent 3k a year rather than pay rent but then the taxman will query why they don't rent it out.Parents can gift the sibling 3k annually each in order to cover the nominal rent value
I don't believe an owner is obliged to rent out a property they own?...the taxman will query why they don't rent it out...
Rental income is 6000 grossSo to be clear:
Mary and John are married to each other.
Their adult child, Joe is divorced.
Mary and John jointly purchase house with Joe.
Joe owns 1/3, Mary and John own 2/3
Joe pays a nominal rent of €6k per annum to Mary & John.
Mary & John are liable to pay tax of €3k (say) on the rental income.
And your question is what's the most tax efficient way for Mary & John to dispose of this asset in favour of Joe?
Thanks , if it was to be passed to adult son now , as part of a future inheritance , what would happen as regards liability Re , tax etc I wonder . (Sign it over now , 2/3 shares to adult son , would either party have / incur liability) thanksYes but I think that won't cover the fact that there is a market rent on the house which is liable for income tax. The taxman wants his tax due on the 6k rental income. It's a tricky one as my first thought was that the sibling can gift each parent 3k a year rather than pay rent but then the taxman will query why they don't rent it out.
It can be handed over now and the same rules of inheritance tax apply as if it were given later so he would probably be below the parent/child threshold which is about 300k. This seems the best solution and he gifts them 6k annually. Bear in mind though that if they save this for 20 years to leave him later it would be liable for tax depending on the threshold at that time so they should be encouraged to spend it.if it was to be passed to adult son now , as part of a future inheritance , what would happen as regards liability Re , tax etc I wonder . (Sign it over now , 2/3 shares to adult son , would either party have / incur liability) thanks
Yes. I only mentioned the gifting if the parents wanted a return on the money. If they are happy to give him a pre-inheritance then he is happy out living in his own house. You will need a solicitor to go through the changing of title etc. and the son will need to declare the inheritance to the taxman on a form so they are aware of it.so no liabilities for any of the parties after house is in full ownership of adult son ?
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