Inheritance tax on gift from Father of second house

M

Mechainical

Guest
Hi,

I am just looking to see where I sand in relation to recieving a gift of a house from my father.

At the present, I already own a house, so the house he wishes to gift to me would be a second home/house, so I am not sure how the tax-free thresholds work.

Any help is appriciated.
Mech.
 
The threshold for CAT from parent to child is €414,799 ( see [broken link removed])
Gifts / inheritances from this class of donor in aggregate since 05/12/1991 up to this amount are tax free. The excess is charged at 25%.

There may be CGT implications for your father on the disposal if the house being gifted is not his PPR.
 
I have looked on the revenue guide, but it does not say anything about getting the house as a second house.

The house is not my faters PPR, but how would there be CGT is there is nothing being gained by him on it?

Thanks for the quick reply.
 
Whether it's a house or shares or whatever, doesn't matter, it's the value of the gift that matters. If the value ( at arms length open market value ) is less than the threshold and if you have had no previous gifts or inheritances from a parent then you have no CAT to pay. If it exceeds the threshold or if you have already used up the threshold in other gifts / inheritances then you pay CAT on the excess as stated.

One does not have to gain anything to have to pay CGT. If this was an investment property your father owned or some other property not being his PPR then if he gifts it to you there may ( depending on its deemed cost & market value ) be a capital gain on his side. That may then be chargeable to CGT at 25%.

There is a provision where the same event gives rise to both CGT and CAT then Revenue allow one to offset the CGT against the CAT arising.

Before any decision is made on this transaction I would suggest appropriate profesional advice. You will need to know the deemed cost of the property when your father acquired it, the current market value and whether you have used any of your CAT threshold to enable anyone to give an indication of any possible tax charges.

Finally, there may also be Stamp Duty on the transfer.
 
The Revenue will calculate the Capita gain on the deemed value of the disposal (ie they will assume that it is transferred at current market value) less his original cost of acquisition (indexed up if prior to 2003)

Your CAT tax, if any, can be offset by your father's CGT liability.
 
Thanks a mill guys. This has made it a bit clearer for me. I will for sure be seeking professional advice, but just wanted to kind of know my position before that.

Again thanks for the quick responces, and I'll post up if and when anything happens.
M
 
Actually, do you guys know what the Stamp duty implications would be? It will be a second house/home for myself, but as it is a gift is there a discounted rate of something?
 
Yet again, you have come up trumps Graham. :)

Thanks again.
 
Hi guys,

A very similar question. (Mods, feel free to move to a new thread/forum if appropriate)

My aunt inherited a house from my grandfather during the boom, and valued then at 400k. (below threshold, so paid no CAT) At best it's 'worth' €300k now I think, so let's take that for arguments sake. She's thinking about gifting it to me. (It's not her PPR, but it would become mine, I'm currently renting elsewhere)

I understand that I'll have to pay 25% of (300,000-41,481) so, about €65,000 to revenue under CAT tax, and as I'm a first time buyer, will be exempt from Stamp Duty. This is obviously a great deal for me. (Will still have to plough another €60k into the house to do it up)

However, my aunt's asset has depreciated by 100k. Does this fact come into the equation at all?

Another question - I have a very decent lump sum saved, but will still need to borrow about €70k to pay off revenue and refurbish the house. Would this be eligible for a mortgage, (thus it's tax benefits) rather than a personal loan? (I'm public Sector, 55k salary, and 70k savings, so a pretty safe bet for a bank I would think)

Thanks
 
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