Most tax efficient way of transferring property to heirs now?

M

MelF

Registered User
Messages
358
Hi, another property-related question if you guys don't mind.....

My parents are in their early sixties and want to transfer ownership of the family home to myself and my three other siblings. They will both remain in the house for the rest of their lives but for reasons I can't get into here no longer want ownership of the property. The house is mortgage free and worth approx 400k.

What is the most tax efficient way to arrange a transfer into our names? Each family member would gain a quarter share (worth approx 100k) each and all are married.

Many thanks
 
Last edited:
Straight forward transfer.

No CGT for parents as disposing of PPR.
No CAT for offspring as under threshold ( assuming no other significant gifts/inheritances)
BUT there may well be stamp duty - even though each is taking less than 125K Revenue may ( I don't have the answer to this) regard it as a series of related transactions and view stamp duty due as 50% of 7.5% of 275K.

But by far the most efficient way to deal with this is to leave it by will on death where there will be no stamp duty.

mf
 
It seems a bit messy to gift a house to 4 people. That will leave a lot of scope for argments. If they want to get rid of ownership of the house, could they leave it to one or two of you instead? Have they other assets which they could leave to the rest of the siblings on their death?

Brendan
 
Thanks for your replies. Yes, it is a messy way of doing things but we will have to also draw up a contract for how it will all be managed until and after parents are deceased. We will all agree to have no say and no interest in the property (other than a share) until then.
 
You'd want the agreement to also deal with how the property will be dealt with after your parents pass away. Will it be sold? Who decides who to sell it to? What if one sibling wants to buy it? Who'll pay the on-going bills for the house? What about repairs?
 
mf1 said:
Straight forward transfer.

No CGT for parents as disposing of PPR.
No CAT for offspring as under threshold ( assuming no other significant gifts/inheritances)
BUT there may well be stamp duty - even though each is taking less than 125K Revenue may ( I don't have the answer to this) regard it as a series of related transactions and view stamp duty due as 50% of 7.5% of 275K.

But by far the most efficient way to deal with this is to leave it by will on death where there will be no stamp duty.

mf
Click to expand...

Do you think it is a wise move to break into ones threshold for appeox. €100k? Personally I don't think this is a wise move.

Do any of the sibling live in the family home?

The is an exemption in relation to CGT, which states that an individual (sibling or close family member) is not regarded as a chargeable person in relation to CGT provided they meet certain standards. One of which includes holding no life interest in any other property.

Really what should be done is to make sure that you of the sibling fulfills necessary requirements for the exemption and that the house is transfered solely to this person.

The sibling who now owns the house enters into a legal agreement in which he/she states that each of the four siblings is entitled to 1/4 share upon death of both parents. This means that no stamp duty will be applicable.

I realise this is not the simplest way to transfer ownership of the house but, in my opinion, it is the most tax efficient!

You can create trust etc... to avoid falling at the life interest fence of the CGT requirements.

The above work better if the house isn't transfer until after parents death and the will states that requirements must be met for ownership to change hands.
 
If they have have reason to transfer ASAP, surely they could on the basis of the figures MF1 provided. They might and should make a legal arrangement that they will hold a life interest until death.
 
You must log in or register to reply here.
Back
Top