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Where to find info. on Inheritance Tax?

  • 07-04-2010 2:48pm
    #1
    alan85
    Closed Accounts Posts: 333 ✭✭


    Hi,

    Parents have 2 houses and there's 3 of us kids.

    I'm wondering would it make sense to pass 2nd house on to us to avoid e200 tax in long run. What are the issues concerning a house worth in region of 300k divided 3 ways? Anyone know the ins and outs?

    Also, anyone know what an average solicitor might charge for administration of the deeds?

    Thanks a mil!


Comments

  • #2
    seamus
    Registered Users, Registered Users 2 Posts: 68,317 ✭✭✭✭seamus


    Are you talking about selling the house and splitting the cash or transferring the deeds into your names? Presumably you are talking about disposing of a house which is not their primary residence.

    Inheritance tax only applies when your parents have died and you've been left something in their will. Gift tax applies to all income received otherwise.

    If your parents sell the house and give you each €100k (for example), then no tax is payable on that €100k each. The gift tax threshold for a child is €414,799.
    However, your parents will have to pay CGT* on that €300k before they can gift it to you. This is currently 25%, so it will cost them/you €75k, which means that you then get €75k each.

    If your parents give the house to the three of you, again there's no tax payable on the gain of the house, however you will be liable for stamp duty on the deeds. Since you are not purchasing as an owner-occupier, you are liable for 7% on the entire value of the property, which is €21,000.

    When you then sell the property, you are each then liable for CGT*, which means that you lose €25k each.

    So on the face of it, having your parents sell the house and give you the cash, is the best option. However, I've put an asterisk beside CGT because it's not something I know a lot about, and there may be ways to avoid CGT if you're immediately gifting the income elsewhere.


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