Tax implication of providing a house for a relative

[Dr Strangelove]

You would probably be better off giving her the premium every year than giving it to an insurance company.

I disagree. You might die before enough has been accumulated, or the funds might not be ring-fenced for the eventual CAT bill. That's what insurance protects against.

Here you have a perfect case for a Section 72 policy: wealthy disponer, non-wealthy disponee, Group B threshold.

It all depends on the pricing of course. If you do get a Section 72 policy quote @Claricias it would be interesting to see this as it's not a common product.

 

[T McGibney]

I disagree. You might die before enough has been accumulated, or the funds might not be ring-fenced for the eventual CAT bill. That's what insurance protects against.

Here you have a perfect case for a Section 72 policy: wealthy disponer, non-wealthy disponee, Group B threshold.

It all depends on the pricing of course. If you do get a Section 72 policy quote @Claricias it would be interesting to see this as it's not a common product.

Your advocacy for a Section 72 policy is curious given your admission above that

I have no idea about how costly it is

 

[_OkGo_]

I think some of the confusion is coming from a lack of numbers. CAT will more than likely be paid either now by the niece or in the future by way of additional monetary gift in a will.

But in both scenarios the OP needs to account for this in the purchase price. If they have €300k to give, they should either:
- gift it now, niece pays tax at €82k and buys a house for ~€200k
- buy in their own name for €200k and set aside the €80k for a future CAT bill.

The situation which the OP wants to avoid most is buying in their own name right up to the limit of what they can afford, eg. €300k in this example. This will create a future CAT bill that the niece cannot cover if an additional €100k has not been set aside in the will.

The cost of CAT needs to be factored in by the OP in either scenario of ownership.