Ryback
Registered User
- Messages
- 2
Hi there, would really appreciate a steer on the best way to do this.
My situation is as follows: My mother owns a 2nd house, which had become dilapidated. Myself and my wife have been renovating it and making it liveable for about the last 3 years.
My mother wishes to transfer the property to us. We've agreed an arrangement with her where we will pay her €240k for it over a period of years in monthly installments.
With all the work done on it, the market value is likely presently in or around 300k, so below the gift tax threshold (or if over, not by much). Should obviously have sorted all this out before renovating, but too late for that now.
I don't want to take liberties tax-wise, but if there are more efficient ways to present this transaction to Revenue, I'd obviously prefer to do those.
I think I see two ways it could be done:
1. My mother gifts the house jointly to myself and my wife, and we "gift" her money for it on a monthly basis. I feel like this might create a gift-tax liability for my wife though, couldn't find any info on that. I think the payments to my mother would also create a gift tax liability for her too, is that right?
2. We draw up a formal loan agreement where my mother gives us the house, alongside a notional "loan" of 240k which we repay in monthly installments. I presume this means we would only be receiving a gift of the difference between the market value and the loan amount, so say 60k. I think there would also be an amount of tax due on the interest that would have been received by leaving the loan amount on deposit, but it looks like the best AER that could be achieved is only like 0.3% at present, and thus below the €3000 per year tax-free gift amount.
It seems like 2. is the better way to do it. Is that above board?
Or is there something altogether different that would be more efficient all around?
My situation is as follows: My mother owns a 2nd house, which had become dilapidated. Myself and my wife have been renovating it and making it liveable for about the last 3 years.
My mother wishes to transfer the property to us. We've agreed an arrangement with her where we will pay her €240k for it over a period of years in monthly installments.
With all the work done on it, the market value is likely presently in or around 300k, so below the gift tax threshold (or if over, not by much). Should obviously have sorted all this out before renovating, but too late for that now.
I don't want to take liberties tax-wise, but if there are more efficient ways to present this transaction to Revenue, I'd obviously prefer to do those.
I think I see two ways it could be done:
1. My mother gifts the house jointly to myself and my wife, and we "gift" her money for it on a monthly basis. I feel like this might create a gift-tax liability for my wife though, couldn't find any info on that. I think the payments to my mother would also create a gift tax liability for her too, is that right?
2. We draw up a formal loan agreement where my mother gives us the house, alongside a notional "loan" of 240k which we repay in monthly installments. I presume this means we would only be receiving a gift of the difference between the market value and the loan amount, so say 60k. I think there would also be an amount of tax due on the interest that would have been received by leaving the loan amount on deposit, but it looks like the best AER that could be achieved is only like 0.3% at present, and thus below the €3000 per year tax-free gift amount.
It seems like 2. is the better way to do it. Is that above board?
Or is there something altogether different that would be more efficient all around?