Transfer of house to Parents

reni10

Hi Guys,

Hopefully someone here can point me in the right direction in relation to the issue of transferring my house into my Parents names so they can live there.

Has anyone done something similar?

The background is:

1. About 15 years ago I bought a house in Ireland and all the family including my Parents lived in it for day 1.

2. About 7 years ago I left Ireland to live overseas and I left my Parents living in the house.

3. About 5 years ago I had the mortgage fully paid off so I fully own the house right now but have not lived in it except for when I come home on holidays for a few weeks every year.

4. I now want to give the house to my Parents as a gift as I want to make sure they are secure in their old age and will always have somewhere to live.

5. My Dad is now over 65 and retired and gets his pension and neither of them have any other property or houses anywhere.

6. I want to just give it to them in so much as I want to sign the deeds over to them and make them the official owners of the house and land in every way to do with what they please.

7. I do not want to have to pay any tax to transfer the house to them and I do not want them to have to pay any tax or money to take legal possession of the house.

It all seems easy enough so would it just be a matter of them contacting a solicitor and me signing a form to say I give them the house and then the deeds are signed in their names and they own the house outright without any tax or other money implications?

latenia

Unless there's some obscure loophole in this situation, they'll have to pay 20% of the value of the house in capital acquisition tax.

DonJose

Why would you want to transfer the deeds of the house to your parents? Unless they plan on selling it there doesn't seem a case for transfering the deeds. Like the above poster stated you could could be hit with a CAT and from the link below the threshold looks in the region of €49,682.

http://www.revenue.ie/index.htm?/revguide/capitalacquisitionstax.htm

reni10

I want to give my Parents some security and I want them to be able to do whatever they want with the property!

So even though I own the house I cannot just give it to someone without paying 20% TAX?

That is ridiculous!!!

It is my house that I paid fully for, I should be able to give it to whomever I please!

And my Parents have been living there for 15 years so basically it is more like their house even though I paid for it!

DonJose wrote:

Why would you want to transfer the deeds of the house to your parents? Unless they plan on selling it there doesn't seem a case for transfering the deeds. Like the above poster stated you could could be hit with a CAT and from the link below the threshold looks in the region of €49,682.

http://www.revenue.ie/index.htm?/revguide/capitalacquisitionstax.htm

Heinrich

If the ethnic group in Dunsink can claim squatter's rights maybe your parents could do the same...

mikemac

Could you maybe rent it to them for some nominal sum like €1 a year.

reni10

I have just been reading the following on the Tax Offices it39-1.pdf which deals with C A T:

Appendix 4 Dwelling-house Exemption - Notes and Examples

What is the relief?
The dwelling-house will be exempt from tax provided certain conditions are met.
Dwelling-house relief applies to gifts and inheritances.

Conditions for the relief
The following conditions must be met:

• The beneficiary must have occupied the dwelling-house continuously as his or her only or main residence for a period of three years prior to the date of the gift or inheritance. Where the dwelling-house has directly or indirectly replaced other property, this condition may be satisfied where the beneficiary has continuously occupied both properties as his or her only or main residence for a total period of three out of the four years immediately prior to the date of the gift or inheritance.
• The beneficiary must not, at the date of the gift or inheritance, be beneficially entitled to any other dwelling-house or to an
  interest in any other dwelling-house.
• The beneficiary must continue to occupy the dwelling-house as his or her only or main residence for six years from the date of the gift or inheritance. Where the dwelling-house is directly or indirectly replaced by other property, this condition may be satisfied where the beneficiary continuously occupied both properties as his or her only or main residence for a total period of six out of the seven years commencing on the date of the gift or inheritance.

This latter condition does not apply if the beneficiary was over 55 years at the date of the gift or inheritance or has died.
A beneficiary, absent during any time through an obligation to work abroad is considered to remain in continuous occupation of
that dwelling-house.

According to this statement located in the Tax Offices own document http://www.revenue.ie/leaflets/it39.pdf I should be able to give the house as a gift to my Parents without any tax or any other implications!:)

Anyone think this is not the case?

Does anyone also think there any other fees to be paid to anyone to transfer the deeds to my Parents names and make them the new official owners of the property?

Would be good to hear also if anyone knows what is the best and cheapest way to go about this?

Is there anyway to email the Tax office about this and ask for a definite answer?
If so does anyone have an email address as it does not seem to list one on the revenue.ie website.

Trinity

I'd imagine the first port of call would be a solicitor?


It has to be drawn up legally and they will also be able to tell you about tax etc although it looks like the house and your parents are exempt from the information you have gathered

In most cases the first consultation is free so wont do any harm to call one.

bullrunner

The best/easiest/least hassle thing to do is to do nothing...you own the house..they live there...no issues with revenue for them or you...no issues with taxes etc etc...why try to complicte things? If the present arrangement has worked for the past number of years why do you need to change it?

patrickolee

Do you have any siblings who would benefit from the sale of the property when your parents pass away? If so, maybe you should also get it clearly stated in the will that the house should pass to you?

Tails142

Also, you may end up paying capital acquisitions tax when they die and leave the house to you.

seamus

patrickolee wrote:

Do you have any siblings who would benefit from the sale of the property when your parents pass away? If so, maybe you should also get it clearly stated in the will that the house should pass to you?

I'd imagine that he wants the house to be split among his siblings in that instance, as it would normally.

As someone else said, there may be no specific necessity to transfer it into their name unless there is something specific you want them to gain out of it. The only benefit I can think for them is that it would allow them to secure non-repayable loans for stuff like taking holidays etc. When they pass away, the house is sold, and the loans paid off.

If you click "About us" on the revenue site, there are links for the various depts. to contact, depending on your location. Your two main concerns are the payment of CGT and Stamp Duty.

esmeralda

As someone else said, there may be no specific necessity to transfer it into their name unless there is something specific you want them to gain out of it. The only benefit I can think for them is that it would allow them to secure non-repayable loans for stuff like taking holidays etc. When they pass away, the house is sold, and the loans paid off.

But if this is the case, wouldn't it be better if he/she simply offered the house as a guarantee, without signing it over?

Unless there is some major psychological aspect (and if there is please let us know as my curiosity is killing me...) that is worth paying a massive amount of capital gains tax to change the house into their name, plus inheritance tax when it comes back to you, then I wouldn't consider changing the house to their name for one second.

Victor

reni10, are you liable to property / wealth taxes in your current jurisdiction?

Will you be liable for capital acquisitions tax if you reinherit the property in your current jurisdiction, in addition to Irish CAT?

Unless your solicitor can find something very clever, I suspect this may be a very expensive propostion.

You could enquire about a deed that allows your parents stay for life (but what happens if one remarries?).

esmeralda wrote:

and if there is please let us know as my curiosity is killing me

Buzz off.

seamus

esmeralda wrote:

But if this is the case, wouldn't it be better if he/she simply offered the house as a guarantee, without signing it over?

For these particular types of loan, they won't take a guarantee. The loan is given on condition that the house is sold to pay the loan when the homeowner passes away (although I don't know the specifics). More correctly, a bank cannot give me a loan and take someone else's house as a guarantee. I must have my own equity, first and foremost. They can take someone else's *word* to provide guarantor on the loan, but not their property.

Glenbhoy

I think you will be able to avoid CAT - you'll obviously need a professional to advise you fully, but the solicitor who carries out the conveyancing should be able to sort that out for you - negotiate it in as part of the price.
This same legislation allowed a businessman to last year buy a house on Ailesbury/Shrewsbury road worth 12-13M and gift it to his daughter, with no CAT being paid.

loyatemu

maybe he's a professional gambler, or is about to go into some risky buisiness venture and doesn't want there to be any risk of the house being repossessed? Presumably there are better ways of limiting your liability though.

esmeralda

Quote:
Originally Posted by esmeralda
and if there is please let us know as my curiosity is killing me

Buzz off.

That comment was my way of inferring I couldn't imagine such a reason existing, not a request for salacious information or thread drift. Sorry it upset you though, certainly not my intention.

More correctly, a bank cannot give me a loan and take someone else's house as a guarantee.

Thanks Seamus, that's really useful to know. I did actually use this system some years ago once for a business venture in Spain, whereby someone guaranteed my loan from a Spanish bank with their property because I had no property there at the time, but of course Romanic law (and Spanish banking culture) is totally different.

seamus

esmeralda wrote:

Thanks Seamus, that's really useful to know.

Though I say that, I'm not 100% sure. The way it works for guarantors here (for mortgages) is that the mortgage is secured on the borrower's home first, and the guarantor second. As best I know, the guarantor doesn't actually sign their home into the agreement, they simply "underwrite" it in terms of, "If the borrower defaults and the house sale doesn't cover the mortgage, I will cover the excess".

The home occupies a pretty special place in Irish law, so I'm only really supposing that no bank would want to (it's not a case of them not being allowed to) offer a loan using someone else's property as collateral. To put it more correctly, just because I default on my loan, that doesn't give the bank any right to sell someone else's property.

From the miniscule amount I know about Spanish property law, the home isn't nearly as protected over there.

esmeralda

From the miniscule amount I know about Spanish property law, the home isn't nearly as protected over there.

I'm no expert either but I'd agree on that one - all I know is that the banks are certainly protected to the hilt! Just one last comment, my loan, which was guaranteed by an extremely kind and trusting friend's house, worked out because I paid up. However, even if it were possible here it is not a system to be recommended in normal circumstances and I have heard of many cases (again, in Spain) that ended in tears (not to mention repossessed houses and family feuds...) I only recommended it in this case because the poster appears to be willing to give up the house anyway so it seemed preferable to paying a load of tax into the bargain.

Mind you, loyatemu's limited liablility hypothesis, if certain, would throw a whole new light on things. Certainly sounds possible.

Victor

Glenbhoy wrote:

This same legislation allowed a businessman to last year buy a house on Ailesbury/Shrewsbury road worth 12-13M and gift it to his daughter, with no CAT being paid.

Is this the one that was sold for 12m this year?

Glenbhoy

Victor wrote:

Is this the one that was sold for 12m this year?

Nah, different one - I have an obsession with the area you see, I just won't be able to tell the folks back home that I've made it in the big smoke until i own one of these properties, so I'm always watching the prices:D

Woof

see Dwelling house exemption - link below:

http://www.citizensinformation.ie/References/howtos/capital-acquisitions-tax-reliefs-and-exemptions

Ace2007

fairly sure that you will have to pay 20% tax. first 400K is tax free afaik