When partner buys u out - do u pay tax on it?

S

shootingstar

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I was wondering if wife / husband divorce and one buys the other out as regards the family home. The person who receives the money banks a nice tidy sum, say €100K - 150K. will they have to declare that to the tax man? will they have to pay tax on it?
SS
 
I don't think so. It would presumably qualify for PPR sale exemption from CGT?
 
shootingstar said:
What?
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:confused:

The sale of one's home (PPR = Principal Private Residence) is normally exempt from Capital Gains Tax (CGT) unlike the sale of most other capital assets. In this case the sale of one partner's share in a PPR (if it is so) would be treated similarly I presume.
 
ClubMan said:
:confused:

The sale of one's home (PPR = Principal Private Residence) is normally exempt from Capital Gains Tax (CGT) unlike the sale of most other capital assets. In this case the sale of one partner's share in a PPR (if it is so) would be treated similarly I presume.
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yes it is PPR. I was just speaking with someone here in the office and they think CGT would come into play unless the person placed the money in a pension trust fund for a certain period of time? what % is CGT
 
shootingstar said:
I was just speaking with someone here in the office and they think CGT would come into play unless the person placed the money in a pension trust fund for a certain period of time?
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This does not sound right to me. Firstly I suspect that the sale of the share of a PPR like this is exempt from CGT so any issue of taxation is moot anyway, and secondly I don't know of any way for a person to avoid CGT (as opposed to income tax) using a pension. I presume that the term "trust fund" is being used inaccurately and erroneously here too.

On what basis is this person claiming this to be the case?
what % is CGT
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20%.
 
ClubMan said:
This does not sound right to me. On what basis are they claiming this to be the case?
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no case really hes not an expert. Its just what he said.

on a slightly different note. My mother built a granny flat at the side of my sisters house. My sis then sold the house and my mother found temp accomodation. Sis paid my mother what it cost her to build (€70K) when house was sold. Mother had to pay the tax man. dont ask me what it was but i know she paid some kind of tax.

This was what made me think that maybe one would have to pay out to tax man no matter what lump sum was received..
 
shootingstar said:
My mother built a granny flat at the side of my sisters house. My sis then sold the house and my mother found temp accomodation. Sis paid my mother what it cost her to build (€70K) when house was sold. Mother had to pay the tax man. dont ask me what it was but i know she paid some kind of tax.

This was what made me think that maybe one would have to pay out to tax man no matter what lump sum was received..
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Totally different case. In general the sale of a property which was always one's PPR is totally exempt from CGT. In the original case mentioned in your first post above I believe that this remains the case. The person in question should get professional advice if unsure.
 
shootingstar said:
I was just speaking with someone here in the office and they think CGT would come into play unless the person placed the money in a pension trust fund for a certain period of time? what % is CGT
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I hope it wasn't an office of tax advisors
 
bazermc said:
I hope it wasn't an office of tax advisors
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It is clearly the Office of Silly Tax Advice.

Clubman is right albeit that I don't think that it is an exemption based on it being the sale of the PPR but as a gift from spouse to spouse.
 
Stifster said:
It is clearly the Office of Silly Tax Advice.

Clubman is right albeit that I don't think that it is an exemption based on it being the sale of the PPR but as a gift from spouse to spouse.
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isnt gift from spouse to spouse taxed once it hits 38k per annum or something like that anyway...

however they are no longer spouses.. divorce is finalised and completed
 
Stifster said:
Clubman is right albeit that I don't think that it is an exemption based on it being the sale of the PPR
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Why not? Isn't that what it is? The former spouse who is vacating the family home is selling their share (half) to the other spouse who will remain in situ?

This thread might also be of relevance - but only if the spouse who leaves the formerly shared family home gets no financial benefit from doing so if I recall correctly:

Separatees can be treated as first time buyers
 
If gift tax was relevant here (which I don't believe that it is...) if they have already divorced then surely the relevant gift tax exemption threshold is that which applies between unrelated parties/strangers (€25K) rather than that which applies between spouses (no limit?)?

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ClubMan said:
If gift tax was relevant here (which I don't believe that it is...) if they have already divorced then surely the relevant gift tax exemption threshold is that which applies between unrelated parties/strangers (€25K) rather than that which applies between spouses (no limit?)?

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No, if it forms part of the divorce settlement then it is treated as a gift between spouses.
 
Jaysus lads!


"I was wondering if wife / husband divorce and one buys the other out as regards the family home."
If this is all done in the context of a Divorce and subsequent transfers as contemplated by the Divorce then it is treated as a matter between spouses with all the exemptions that go with that. So - no CGT, CAT or stamp duty. IF this happens long after the Divorce, was not contemplated in the Divorce and is entirely separate from the Divorce, then it is treated as a transfer between non related parties. So you will have the possibility of CGT ( if it is not now someones PPR), CAT ( if it exceeds thresholds) and stamp duty ( if it exceeds thresholds).

Is that clear enough?
Actually, it helps if OP's are clear about what they are asking also!

mf
 
mf1 said:
Jaysus lads!

...

If this is all done in the context of a Divorce and subsequent transfers as contemplated by the Divorce then it is treated as a matter between spouses with all the exemptions that go with that. So - no CGT, CAT

...
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Which is basically what I said?
ClubMan said:
I don't think so. It would presumably qualify for PPR sale exemption from CGT?
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ClubMan said:
If gift tax was relevant here (which I don't believe that it is...) ...
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