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CAT and Gift Tax implications?

  • 25-06-2009 12:49pm
    #1
    JohnDigital
    Registered Users, Registered Users 2 Posts: 513 ✭✭✭


    Can I please ask some general advice on a potential transfer from one relative to another.

    Lets say my brother was to pay off my mortgage of €60k and some personal loans of another €40k what are the tax implications?

    The brothers €100k is money that was earned in the middle east and he is a permanent resident there.

    From what I can make out on revenue.ie there is a threshold of €43,400 before the tax kicks in.

    In this scenario of the €40k bank loans were handled separately from the mortgage this fits below the threshold so no tax liability on that sum.

    With the Mortgage is it any advantageous to write his name up as a part owner of the house or is the tax liability much the same either way?

    I'm planning on taking legal and financial advice, I'm just researching here for general knowledge in advance of that.

    Thanks.


Comments

  • #2
    pigeonbutler
    Registered Users, Registered Users 2 Posts: 666 ✭✭✭pigeonbutler


    You seem to be on the right track with the first part. Any gift to you in excess of the 43k threshold will be taxed at 25% in your hands. That assumes you haven't received any other gifts/inheritances from other Group B threshold people before i.e. other siblings, aunts, uncles, etc.

    As for trying to plan around the mortgage element by making him an owner of the house, that would be very messy and probably not advantageous. You'd probably be charged CGT (if there has been a gain) on the disposal of x % of the house. And because you are related, market value would apply to the transfer. Then he'd probably have to pay stamp duty and CAT on the transfer too. And of course then there's the issue that he would own a share of your house, which might be messy in the future.

    The bottom line is that it's not really possible for your sibling to give you €100k (be it cash or other benefits as is the case here) tax free. His residence and the source of his income probably isn't all that relevant.

    Of course if you're happy to pay 15k tax in order to clear debts of 100k then I suppose you're getting a pretty good deal!


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