Transferring ownership of a house

[machalla]

An interesting question that was posed to me recently.

How would you go about tranferring the ownership a house (no mortgage) to a parent? What would the likely costs be? I believe that there shouldn't be a tax bill involved as you can transfer between parent and child up to about €420,000 in a lifetime.

 

[ClubMan]

I believe that there shouldn't be a tax bill involved as you can transfer between parent and child up to about €420,000 in a lifetime.

There may be no gift tax liability for the recipient but the transfer may trigger a CGT liability for the donor unless there are exemptions or allowances for such a transfer. Stamp duty at half the normal rate applicable is still payable by the recipient too. The normal legal/conveyancing costs would also apply.

 

[mf1]

Theres something floating around in the back of my mind (I'm tired, its been a busy day so vaguer than usual!!) that the CAT threshold is less from child to parent for a gift, than the other way around.

Plus in addition to CAT, poss. CGT and stamp duty there would be the legal costs associated. Plus VAT and outlays.

I always ask why someone wants to do something as well - sometimes I find that people are working on an incorrect premise, maybe making some assumptions that are not necessarily valid.

mf

 

[machalla]

I didn't think of the stamp duty or cgt implications. I had only considered that there would be legal costs involved. I had checked out the gift tax implication for them.

Thanks for those points.

 

[machalla]

I think the premise for this is that the child and parents bought the house together several years ago. Now the child (so to speak) is getting married soon and will have their own house with their spouse. As the current house is the parents home in effect they were concerned that if for instance the marriage ended up badly or the child died suddenly at some point the spouse would have a claim on the parents house.

I had mentioned just specifying who the house goes to in the childs will but there is also the concern on their part regarding the possibility of divorce and the spouse having a claim on the parents home.

So that might make the reasons more clear. There may be a better way of dealing with all this. Not being either a solicitor or an accountant I thought I'd post it up here to see what might come to light. The CGT and stamp duty is definitely not something either had considered (nor had I).

 

[ClubMan]

Theres something floating around in the back of my mind (I'm tired, its been a busy day so vaguer than usual!!) that the CAT threshold is less from child to parent for a gift, than the other way around.

and [broken link removed] (in particular [broken link removed]) might clarify further.

 

[mf1]

Thanks for that Clubman - that confirms my concerns i.e. that the threshold for gifts from child to parent is only E46673.00

But back to the main issues : 1. is this a good thing to do? 2. Is there a better way to do it? 3. Have we covered all angles?

First: there are genuine concerns here. If the child dies and the property is held as joint tenants then it will not form part of her estate and passes automatically to parents. However, if child and spouse split, then this house could be considered as an asset - it is a valuable asset. So, yes this is a good thing to do and I assume ( actually no, never assume!!!) that the parents will will it back to child on their death.

Second - I generally find that the straight forward transparent approach works best most times.

3. CAT, CGT ( is this childs PPR? i.e. no CGT), Stamp Duty ( only on half the property at half the going rate), legal fees. Messy but probably worth it for peace of mind.

God, we're good.

mf

 

[ClubMan]

Thanks for that Clubman - that confirms my concerns i.e. that the threshold for gifts from child to parent is only E46673.00

There's a footnote that says

* In certain circumstances a parent taking an inheritance from a child can qualify for the Group A threshold.

but I'm not sure (a) if this only applies to inheritances and not also gifts from the child to the parent and (b) what the "certain circumstances" are that must pertain for the higher exemption threshold to apply.

 

[mf1]

Sorry, Clubman, we're not as good as I thought we were!!!

There is a specific CAT exemption for houses where the house is left? transferred? into the name of someone who has occupied it as PPR for previous three years and has no interest in any other property. Worth looking into.

mf