Parents house - changing ownership?

Branoic

Myself and my wife have been living in her parents' second house for the last 3 years.

They used to rent out the house but they've been incredibly generous and have basically given it to us as we had just started a family and were stung in the crash. It will be our long term home (we've already started renovations and planning the extensions )

There is no mortgage on the house but we just give them some cash each month.

My mother-in-law wants to make things more official and look into transferring ownership of the property legally to us.

How would we go about this and what would be involved? Is there a way of doing it without involving large sums of money, particularly large sums which go to the government?

Kristopherus

Have a look at the Revenue website. The limits that are allowed before the Govt's grabbers kick in are listed there. It might be best to do that transaction before any improvements are carried out so as to keep the value of the house as low as possible.

wowy

Look up Revenue CAT10 Transfer of Dwelling information.

Basically, a parent can transfer a residential property without giving rise to CAT (but the parents will be subject to any CGT on the disposal of the house) to a child if:

- The child has been living there for 3 years;
- The child has no interest in any other residential property; and
- The child continues to live in the house for 7/9 (can't remember which) years after the transfer. There are exceptions (such as selling the house to trade-up), but otherwise if the child leaves the house/sells the house, Revenue will claw-back the foregone CAT.

Branoic

wowy wrote: »

- The child has no interest in any other residential property; .

Hmm, so if we're stuck with a mortgage for an apartment that we vacated in order to move into this house, we're buggered?

Eldarion

Those criteria are new to me, I didn't know there were stipulations like that in effect...

But even so it's not as simple "can transfer any property to child", the value of the asset comes into play against thresholds based on relationships.

In your case the parent can transfer a property or asset to his/her son/daughter up to the value of €225,000 without incurring Capital Acquisitions Tax.

You can see the list of thresholds and their applicable dates here: http://www.revenue.ie/en/tax/cat/thresholds.html

NinjaTruncs

Can you not sell the apartment. Depending on the size of negative equity it should be offset by the fact you are getting a heavily discounted house.

wmpdd3

Was nppr paid on the house? If not the patents are looking at 7k tax bill.

Branoic

Thanks the point in the right directions. I'll check those links out. I'm sure at some stage we'll be going to a solicitor for this advice but just wanted to understand roughly what we're looking at

NinjaTruncs wrote: »

Can you not sell the apartment. Depending on the size of negative equity it should be offset by the fact you are getting a heavily discounted house.

That's definitely all part of the overall plan, yes! Cannot wait to be rid of the damn apartment.

Branoic

wmpdd3 wrote: »

Was nppr paid on the house? If not the patents are looking at 7k tax bill.

Isn't there an exemption to nppr where the property is occupied by family and is within a short distance of the primary residence? Can't remeb if it was 2 or 5 KM. regardless, this house qualifies on those criteria

Mrs OBumble

Branoic wrote: »

Hmm, so if we're stuck with a mortgage for an apartment that we vacated in order to move into this house, we're buggered?

You are not "buggered", you and/or your wife's parents simply have a tax obligation.

Contrary to popular opinion, tax is not a bad thing. It pays for roads, schools, hosptials, social welfare, and various other things which people regard as good to have. Even politicians - becuase the alternative (not having them) is generally regarded as a worse option. (Don't believe me? Ask the residents of any country being ruled by a military coup.)

Consult an accountant for advice about how to manage your affairs in a way that will minimize your tax-liability.

Branoic

Yeah, thanks, I'll do that.