If parents gift me family home now ...do we pay less for nursing home costs in future

[Ballygriffen]

If my parents were to gift me their house now (their only asset) would it be beneficial for them and myself when paying for nursing home costs in the future >5 years from now under the Fair Deal. I am an only child. I know I would be liable of gift tax (House Value - 335K * 33%) but this would most likely be less than 22.5% of house value in the future ( Nursing home costed capped at 7.5 of assets * 3 yrs). Their only income is the state pension and they only have a small savings pot.

 

[Brendan Burgess]

How much is the house worth?

What age are they?

They would be crazy to do so.

Rules might change. You fall out with them. You get married , you die, your widow kicks them out.

You end up with a Capital Gains Tax bill on an asset that was accumulating free of CGT.

All to avoid paying what they should be paying anyway.

Brendan

 

[Leper]

If my parents were to gift me their house now (their only asset) would it be beneficial for them and myself when paying for nursing home costs in the future >5 years from now under the Fair Deal. I am an only child. I know I would be liable of gift tax (House Value - 335K * 33%) but this would most likely be less than 22.5% of house value in the future ( Nursing home costed capped at 7.5 of assets * 3 yrs). Their only income is the state pension and they only have a small savings pot.

The rules/regulations regarding the Fair Deal system change quite often. I would advise you contact your local HSE Fair Deal Contact and ask for the up-to-date information regarding implementation of Fair Deal regarding your parents. Only then will you be able to make an accurate assessment of your situation.

More Advice:- Take written notes and note dates and person you spoke with.

 

[The Horseman]

How much is the house worth?

What age are they?

They would be crazy to do so.

Rules might change. You fall out with them. You get married , you die, your widow kicks them out.

You end up with a Capital Gains Tax bill on an asset that was accumulating free of CGT.

All to avoid paying what they should be paying anyway.

Brendan

If the property is gifted they cant be "thrown out". The law requires that they are legally entitled to remain in house till they pass.

This was introduced to ensure people were not "thrown out" at which point the state had to house them.

As far as I know there is no cgt liability in these circumstances. As this type of situation is excluded from cgt. (I don't have a link for this but vaguely remember reading it lately). Search for dependent relative on Revenue.

If the property is retained after both parents have passed and there is an increase in value between date of death and date of sale then there is a cgt liability.

 

[john luc]

If you are living in this house and its your principle home and you don't own any other property's then when you inherit the house no tax on this would apply.

 

[THE_Chris]

...provided you have lived in the house for the previous three years before the second parents death and provided you live in it for a further six years, I believe.

I don't think that applies to this situation merely gifting the house to a child.

 

[Brendan Burgess]

Ballygriffen

Askaboutmoney is not a substitute for professional advice. If you decide to take any major decision impacting your parents, make sure that you take paid legal, tax and fair deal advice.

I don't know enough about it, but many of the responses in this thread are at variance with my understanding of tax and the law.

Brendan

 

[huskerdu]

More importantly, Ballygriffens parents should take proper legal advice before they give away their home and leqave themselves living in a house which belongs to someone else. They should be very clear on their legal rights and not depend on randomers on the internet with no legal basis for their "advice"

 

[Joey99]

If the property is gifted they cant be "thrown out". The law requires that they are legally entitled to remain in house till they pass.

This was introduced to ensure people were not "thrown out" at which point the state had to house them.

As far as I know there is no cgt liability in these circumstances. As this type of situation is excluded from cgt. (I don't have a link for this but vaguely remember reading it lately). Search for dependent relative on Revenue.

If the property is retained after both parents have passed and there is an increase in value between date of death and date of sale then there is a cgt liability.

This is not correct (or at least only partially correct). Just because you gift a house doesn't give you any right to reside or protection against being thrown out later if the gift is outright and unconditional.

That said, your parents would need to be independently legally advised in relation to this and there is no way any competent solicitor would advise them to make such an outright and unconditional gift unless they had so much money/other property that the gift could not negatively impact them in future (but I note this is the situation the OP is asking about).

What is much more likely in a normal situation is that the parents could make a gift with reservation of either a life interest or a right of residence in the property. This would be formally agreed and documented and registered against the property so that it would be available for all to see. It would make the property unmortgageable (is that a word?)

Sorry for going off on a tangent but important to get this right

 

[The Horseman]

This is not correct (or at least only partially correct). Just because you gift a house doesn't give you any right to reside or protection against being thrown out later if the gift is outright and unconditional.

That said, your parents would need to be independently legally advised in relation to this and there is no way any competent solicitor would advise them to make such an outright and unconditional gift unless they had so much money/other property that the gift could not negatively impact them in future (but I note this is the situation the OP is asking about).

What is much more likely in a normal situation is that the parents could make a gift with reservation of either a life interest or a right of residence in the property. This would be formally agreed and documented and registered against the property so that it would be available for all to see. It would make the property unmortgageable (is that a word?)

Sorry for going off on a tangent but important to get this right

The initial post related to how the OP's parents house would be impacted upon if they need to avail of the Fair Deal scheme. if the child inherits the family home while the parents are still alive the parents have a right to remain in the family home with a right of residency.

The parents can't give the family home to the children and then expect the State to house them as required by law. There is a clause in the transfer of the property that the parents have a right of residency so yes the property can't be sold however if there was a mortgage outstanding on the property the child inheriting the property could secure a mortgage to pay off the balance of the mortgage if any was outstanding.

The property would be unmortgagable in the normal sense as no financial institution would offer a mortgage on an asset that had the right of residency clause on the folio.

My siblings and myself went through this ourselves purely for tax planning purposes.