Buying a house from family member - Help!

Tideswell

Hi

Does anyone have any experience purchasing a house from a family member?

My situation is this. I'm currently living in what was the family holiday home. My father has offered us the house at a reduced price, which is great. I'd like to understand what the tax, stamp duty implications are?

If anyone has been through this before I'd love to know how it was handled.

Thanks

T

Tigger

he can gift you up to 225k i think so he can discount by that much
but get a tax advisor to tell you how to do it

Tideswell

Will do Tigger, thank you

Eldarion

Does he have an outstanding mortgage on the house? The bank is not going to be cool with him just gifting away a secured asset while the loan is still outstanding.

If he owns the house outright and the value is less than the gift band then you're golden, no tax, no stamp duty etc. Of course he doesn't get a lump sum but depending on what kind of reduced price you're talking I'm sure ye can work something out.

Tideswell

Eldarion

No, there's no mortgage outstanding.
He owns the house outright. The issue is that he is looking for a lump sum (not much) and it would be under the gift band. He's talking about getting a valuation for stamp duty....I thought that stamp duty was paid on the agree purchase price and no need for a valuation. Any ideas?

tricky D

You need to consult a solicitor or tax advisor as there are certain tax implications in play. The taxman will look to levy tax based on the market value of the house, not your buying price if it is substantially below market value. The term of your residency might also affect whether the tax is levied on the transaction. It's best to get professional advice for all this.

earlyevening

Read up on "Dwelling house Relief" on revenue's site.

If you live in the house for 3 years before and 5 years after the gift, then the gift wont be deducted from your 225,000 capital acquisition tax threshold. Might be of huge benefit when you eventually inherit from him.

If you receive 80% of that 225k figure in one lump sum, you need to declare it to revenue even if it is not liable for any tax.

http://www.revenue.ie/en/tax/cat/leaflets/cat10.html

(I think that's right...)

hfallada

OP speak to a tax adviser. The last thing you need is a audit in a few years and revenue giving you a massive tax bill with interest from a simple mistake. A Tax adviser will be of more use than a solicitor

earlyevening

hfallada wrote: »

OP speak to a tax adviser. The last thing you need is a audit in a few years and revenue giving you a massive tax bill with interest from a simple mistake. A Tax adviser will be of more use than a solicitor

Why pay professional fees when all the info is available on revenue.ie?