Selling investment property to my daughter as her primary residence...

G

gockily

Guest
Hi,

I have an investment property that I purchased for €305k just over two years ago. It has a market value of approximately €420k now, based on a recent sale in the estate. My daughter who is 24 is looking into buying a home with her boyfriend and would be interested in maybe buying this house. Now I was not actually planning on selling, but would do so to help her out if it made sense.

I am interested to know what the most tax efficient (but 100% above board) mechanism for selling it to her would be - for us both. Clearly, I would be prepared to sell it to her at somewhat less than the market value and as I would have no selling agent fees and we would probably enjoy cheaper legal fees (using the same solicitor) I would want to pass that benefit on to her, or at the very least, share it with her. I assume that this would give me lower CGT, but I am worried that if I seel to her at below MV, would she incure some sort of gift tax?

I have also heard that stamp duty is calculated differently in this scenario - can anyone shed any light?

This is just at a discussion phase at the mo, and if we were to go ahead we would clearly get professional advice, but at this hypothetical phase, I would be interested to understand some options.

Thanks in advance!
 
gockily said:
I have also heard that stamp duty is calculated differently in this scenario - can anyone shed any light?
Click to expand...
SD on asset transfers between blood relatives benefits from [broken link removed] by being charged at half the normal rate applicable. If the property was being transferred to your daughter alone then this would apply. If it was being transferred to her and her partner then the treatment may be different.
 
CGT will not be affected in any way by the price you sell to your daughter since it will be calculated on the market value regardless.

Your daughter is entitled to take up to 496k approx from you as a gift ( assuming no prior gifts from either parent) without paying gift tax.

Stamp duty will be calculated on the market value also and as ClubMan says you will qualify for consanguinity relief.

However all above re stamp duty and gift tax is subject to your daughter buying the property in her sole name, if her boyfriend is involved then the stamp duty relief is lost and gift tax is more complicated as he is a stranger to you and can only take up to 24.8K as a gift. Depends on how much of a gift there is.
 
Vanilla, just to clarify, are you saying that if the OP sells her apartment to her daughter for 400k but it is worth 420k, the 20k is considered to be a gift?

Also, just out of curiosity, what's to stop the OP selling half the property to her daughter 210k, with no stamp duty and half to her boyfriend who would also be under the stamp duty threshold? I realise there would be extra legal fees.
 
"and half to her boyfriend who would also be under the stamp duty threshold?:

It does not work like that. The property is being sold. The market value of the whole is what triggers all the tax liabilities/breaks.

So on 420K - CGT is payable by Vendor. CAT is probably not due on the 20K as a gift to the daughter( depending on other gifts etc.,etc) and stamp duty is payable on the whole value - but daughter gets the consanguinity relief ( half the rate) but if there is another purchaser, that relief is lost.

Revenue have the whole thing pretty well sussed.

mf
 
Thanks mfi....so the 20k is considered a gift whether or not Revenue act on it. I knew cgt would be charged on the value and that the vendor pays it. I just wondered what happens if, say, the OP sold half the property to her daughter and sold the other half, two years later to the boyfriend? I realise the vendor pays cgt on the whole amount, but how can they charge stamp duty to either (consanguinity relief wouldn't come into it if it's under the threshold). Imagine the daughter was single and bought half and two years later met someone she wanted to live with. Don't know if I'm making sense here, just one of those things that flickers across the brain! :)
 
That would be different because it truly would be two separate transactions. Then they would be treated as such.
 
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