That is why I wanted to put her name on the deeds, god forbid I die next year, at least she's on the deeds.
I think the best solution is to take the hit of CAT now and buy a property net of that amount.
Nobody did actually answer my query of joint ownership with her on the deeds if I purchase a small house outright as to what our tax obligations are with this though.
If you were to buy a property in joint names should anything happen to you it will pass to your niece by survivorship. Also outside probate. Rent a room is €14,000 tax free to the occupier. Again outside the RTB. No tax liability. You could draw up an agreement whereby she could repay you a certain amount per year. My concern is you mentioned her previous home was sold? By whom? Would they have an influence in her future?Lifetime right of residence might work, I'll look into it., thank you.
I'd agree but I haven't seen any suggestion in the thread so far that avoids the tax bill.You are paying an avoidable €82k which makes little sense.
I am all for the tax tail not wagging the dog but this is an excessive price to pay for something which can be achieved without the tax bill.
If you were to buy a property in joint names should anything happen to you it will pass to your niece by survivorship. Also outside probate. Rent a room is €14,000 tax free to the occupier. Again outside the RTB. No tax liability. You could draw up an agreement whereby she could repay you a certain amount per year. My concern is you mentioned her previous home was sold? By whom? Would they have an influence in her future?
I have thought of this, but again, whatever deal we come to would be in the solicitors agreement that would be drawn up beforehand.I think you also have to consider the possibility that she might get married or be in a co-habiting relationship at some point and what the impact of this will be on the ownership of any property.
This. I would hope at some point she would be capable of working, even part time.I'd agree but I haven't seen any suggestion in the thread so far that avoids the tax bill.
Hoping that she would classify as a dependent relative is too risky. Totally and permanently incapacitated is a high bar to meet. The alternative of hoping everyone lives long enough for the niece to reach 65 is also high risk.
What you are asking of the niece would be to remain incapacitated for the next 35 years. The OP knows the details but I'm sure if the niece can manage some sort of employment or independence that she would want to do it. Does she classify as dependent if she meets someone and gets married? Far to many variables to control
All you are doing is kicking the CAT down the road hoping it disappears when more than likely it could get even bigger if the dependent relative criteria aren't met.
All options should be explored and tax minimised but I wouldn't be confident of avoiding the CAT bill altogether
Would you hang an entire strategy on niece being able to avail of this though?For anyone unfamiliar with Section 59 it basically provides that where Revenue are satisfied that tax due in respect of a gift or inheritance can't be collected immediately without excessive hardship, they can allow payment to be postponed for such period, to such extent and on such terms (including the waiver of interest) as they see fit.
There is a lot of useful advice on this thread but it is worth also considering a Section 72 life insurance policy. This is basically insurance that pays out the CAT liability of the recipient of an inheritance. I have no idea about how costly it is but assume that it is cheaper and less hassle the younger you start.
What I would suggest is:
- Buy a house in your name
- Give your niece a lifetime right of residence. I think there should probably be some contract drawn up that obliges her to take care of it and who is responsible for repairs, LPT, bills, etc. I would include a low rent indexed to CPI
- Make sure that both you and your husband's wills are clear that she will inherit the house. Make sure that this is not a surprise to your own offspring
- Take out a Section 72 life insurance policy that will pay any CAT bill on inheritance and pay the premiums for the rest of your life
- When you pass away she will own the house outright with no tax bill
By the way I really admire what you are doing here @Claricias - there are lots of people with your means who wouldn't be as generous and considerate.
I would be wary of this myself.Would you hang an entire strategy on niece being able to avail of this though?
I'd always think that if even there was a loophole or a strategy to minimise the CAT, that Revenue would do their utmost to collect all dues.
For anyone unfamiliar with Section 59 it basically provides that where Revenue are satisfied that tax due in respect of a gift or inheritance can't be collected immediately without excessive hardship, they can allow payment to be postponed for such period, to such extent and on such terms (including the waiver of interest) as they see fit.
I like the look of the section 72.
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