inheriting property owned by father

T

Tinwhistler

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Hi, hoping you can offer some guidance or advice
My father owns a small house in which me, my wife and children have lived in for the past 6 years. Daily, we make long commutes to work/school averaging 4-5 hours per day. We find the commute difficult & long to live closer to work/school in Dublin but rents for a modest house in our target area range between €1850 and €2,450 per month meaning we could no longer save any money each month. Could my father (age 76) if he wished, gift me the house now (valued at c€260k), during his lifetime so that I could sell it to part fund purchase of a house in Dublin (purchase price of €315-350k). My mother has said he told her that he cannot sell it to help us because he'd pay too much tax but if I was to sell it, would I be subject to tax? It's been our primary residence for six years & he had told me when we moved here that the house will be mine - the house was his parents home that he inherited after they passed away.
 
Your father can gift you the property. You may be exempt from Capital Acquisitions Tax - Gift Tax.

Your father will have a CGT liability- to work that out, you'd have to establish when he acquired it and at what value/cost.

In the overall scheme of things, it may be worth while taking the tax hit to achieve your aim.

I suggest you take tax advice to make more sense of the numbers.

mf
 
mf1 said:
Your father can gift you the property. You may be exempt from Capital Acquisitions Tax - Gift Tax.

Your father will have a CGT liability- to work that out, you'd have to establish when he acquired it and at what value/cost.

In the overall scheme of things, it may be worth while taking the tax hit to achieve your aim.

I suggest you take tax advice to make more sense of the numbers.

mf
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Thanks MF for your reply, much appreciated. He inherited it in 2009, would it have been valued at that stage?
 
mf1 said:
Yes. It had to be valued for probate.

MF
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OK thank you. If he did decide to gift it to me, would I be allowed to sell it immediately - I think I've read somewhere online about having to keep it for another 2 years after acquiring it or I'd be liable for tax? Is that right or am I misunderstanding something
 
I think you're thinking of Dwelling House Relief- which won't apply.

Technically, there is no reason why you can't acquire the property and sell it again.

Does it not make more sense for your father to sell? It's just one transaction then and he gifts you the funds?

mf
 
Are you sure your father wants you to have the house and to do with it what you want? Are there more children in the family? Has he made a will? What's the situation in regard to your mother?
 
noproblem said:
Are you sure your father wants you to have the house and to do with it what you want? Are there more children in the family? Has he made a will? What's the situation in regard to your mother?
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Hi noproblem. Thanks for your post and questions. He has told me it will be mine, he has made a will but I know he would have been happier had I settled in the house for life but unfortunately its too far from Dublin where my wife and I are both born and grew up in. I have two younger siblings, one in full time care due to profound disability, the other sibling wants to inherit the family home in Dublin. My mother wants us helped now so we can be happy, live where we want to be without paying potentially €2k per month in rent indefinitely so that we can be in a position to help care for my disabled sibling on weekends in the future as he goes home every 2/3 weeks for 2 nights
 
mf1 said:
I think you're thinking of Dwelling House Relief- which won't apply.

Technically, there is no reason why you can't acquire the property and sell it again.

Does it not make more sense for your father to sell? It's just one transaction then and he gifts you the funds?

mf
Click to expand...
Thanks, it does make more sense but ultimately it will be his decision.

Both my father and I made improvements to the house, new windows, doors, insulation, new boiler etc. Can receipts be used to offset any of the CGT or are those improvements irrelevant, bar perhaps having added value to it as it was in extremely poor condition
 
Cost of repairs can be used against the CGT. 2009 was just at the end of the boom so its possible the valuation then was on the high side.
There are a few factors here that might benefit both parties. I' d recommend a consultation with an accountant.
I think mf's idea of him selling and then gifting you the funds would be the best approach. It would mean that the figure received will be subtracted from any future inheritance e.g. if you got 250000 and if in the future when your Dad dies you will be liable for inheritance tax on anything above the difference between 250000 and the father/son inheritance threshold
If your father is liable for CGT and this is stopping him from selling you could always make an arrangement to pay him back using the gift tax provisions.
So 3000 a year from you to Dad and 3000 a year from you to Mam would eat into the CGT quickly, if your wife did the same all the better i.e. 12000 paid back annually
All supposing you would have the funds but certainly worth teasing out with an accountant
 
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Vanessa said:
Cost of repairs can be used against the CGT. 2009 was just at the end of the boom so its possible the valuation then was on the high side.
There are a few factors here that might benefit both parties. I' d recommend a consultation with an accountant.
I think mf's idea of him selling and then gifting you the funds would be the best approach. It would mean that the figure received will be subtracted from any future inheritance e.g. if you got 250000 and if in the future when your Dad dies you will be liable for inheritance tax on anything above the difference between 250000 and the father/son inheritance threshold
If your father is liable for CGT and this is stopping him from selling you could always make an arrangement to pay him back using the gift tax provisions.
So 3000 a year from you to Dad and 3000 a year from you to Mam would eat into the CGT quickly, if your wife did the same all the better i.e. 12000 paid back annually
All supposing you would have the funds but certainly worth teasing out with an accountant
Click to expand...
Thanks Vanessa for your reply.
 
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