Gifting house to children, costs involved

Got2TurnAround

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

whatnext

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

You need to allow a couple of hundred thousand for legal fees for when the children have a difference of opinion on what to do with the house 5 or 6 years down the road. Mind you I suppose that would be their problem not yours.

Got2TurnAround

Wouldn't his happen with a standard inheritance (through executing a will) regardless?

4ensic15

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

You cannot use the same solicitor as the children. This doubles the costs.

Got2TurnAround

Thanks 4ensic15, do you know if that's a law or just a recommendation for security purposes?

Atlantic Dawn

Got2TurnAround wrote: »

Thanks 4ensic15, do you know if that's a law or just a recommendation for security purposes?

It's the law, it's so both parties have impartial advice.

Got2TurnAround

That's a shame. I thought because it's not mortgaged and no money is changing hands that one solicitor could carry out the transfer.

Tilikum

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

We just did this during the week.

Solicitors fees......my mate did it around €500. Still have to pay Dad's solicitor.
Stamp duty : 1% of the house.
Registration fees around €600
If the house is worth more than €280k they have to pay gift or inheritance tax not sure which?

It's absolutely joke, my Dad worked his balls off his hole life to pay for the house, then he has to give them more money so he can give it to his kids. What would happen if we/he didn't have the money to pay the stamp duty/fees?

antoinolachtnai

The solicitor wouldn't do the work. If you didn't pay him he would hold the papers I imagine. If ou don't pay the stamp then the sale isn't valid.


Unfortunately professionals have to be paid. Conveyancibg costs real money, both in terms of time expended and the insurance cover required.

The government needs to get a share of the uptick in property values in order to continue investing in public infrastructure. Everything costs money.

Tilikum

Tilikum wrote: »

If the house is worth more than €280k they have to pay gift or inheritance tax not sure which?

Each child has a 280k tax free threadhold so if it's split two ways the house could be worth 560k and no capital Acquisitions tax would be due (assuming there was no previous gifts or inheritances involved).

Spanish Eyes

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

I take it you have another property to live in yourself?

If it is a property that you have owned for a while but was let out, then on disposal of that property a proportion of any gain would be liable to CGT.

But if you buy another property now it will then be your PPR and no worries tax wise on disposal.

If you leave the new (or previously owned) property in your will no CGT will be payable, but CAT may be, depending on the value and to whom you leave it.

Both parties cannot use the same solicitor anymore.

You may need a valuation of the property to prove no capital taxes are payable on disposal.

GGTrek

Got2TurnAround wrote: »

That's a shame. I thought because it's not mortgaged and no money is changing hands that one solicitor could carry out the transfer.

Could the OP perform the conveyancing on his own in such case? Is it allowed by law?

Thestones

Lyra Shy Kindergarten wrote: »

Each child has a 280k tax free threadhold so if it's split two ways the house could be worth 560k and no capital Acquisitions tax would be due (assuming there was no previous gifts or inheritances involved).

Sorry to piggyback on this, I was given a gift of 240k to help purchase a house from my dad, he has changed his will to state I've already received this amount. If the threshold is 280k, I can still receive another 40k before I'm liable for any tax, is that right?

Thestones

Thestones wrote: »

Sorry to piggyback on this, I was given a gift of 240k to help purchase a house from my dad, he has changed his will to state I've already received this amount. If the threshold is 280k, I can still receive another 40k before I'm liable for any tax, is that right?

You should get some proper advice but roughy the first gift would have only reduced your threashold by 237k as you would also have be entitled to the 3k per year small gift exemption (this would rise to 6k if the money was from both your parents not just your dad). So you would have 43k more of your threashold left and it will most likely be raised again in the budget so you should have a little more even.

If it's money he will be giving you though he should start to give you 3k a year every year (and another 3k every year to your wife/gf if you have one) as this will be tax free and reduce your tax liability compared to what you would pay were it all left to you in an inheritance.

Also with receiving that amount (240k) you needed to make a tax return as it was a significant amount of your tax free threashold.

doctorchopper

You may also want to check into whether they will be liable if you have to go into a nursing home under the fair deal as the government takes part of your assets for payment.

Thestones

Lyra Shy Kindergarten wrote: »

You should get some proper advice but roughy the first gift would have only reduced your threashold by 237k as you would also have be entitled to the 3k per year small gift exemption (this would rise to 6k if the money was from both your parents not just your dad). So you would have 43k more of your threashold left and it will most likely be raised again in the budget so you should have a little more even.

If it's money he will be giving you though he should start to give you 3k a year every year (and another 3k every year to your wife/gf if you have one) as this will be tax free and reduce your tax liability compared to what you would pay were it all left to you in an inheritance.

Also with receiving that amount (240k) you needed to make a tax return as it was a significant amount of your tax free threashold.

Thank you. Do I by law need to make a tax return? At the time I received it neither my dad's solicitor or my own(re purchasing house) advised me to do anything as under the threshold. The only thing my own solicitor was concerned about was getting my dad to sign some paperwork from bank re mortgage, it was to do with the gift and him having no rights to property.

Bold Abdu

Thestones wrote: »

Thank you. Do I by law need to make a tax return? At the time I received it neither my dad's solicitor or my own(re purchasing house) advised me to do anything as under the threshold. The only thing my own solicitor was concerned about was getting my dad to sign some paperwork from bank re mortgage, it was to do with the gift and him having no rights to property.

You'll need to complete a Return as the gift exceeded 80% of the relevant threshold.

doctorchopper

doctorchopper wrote: »

You may also want to check into whether they will be liable if you have to go into a nursing home under the fair deal as the government takes part of your assets for payment.

There is a number of years after the gift when this may be the case but after that it won't be considered. Another good reason to gift things like money and property early so that you won't have to lose asset value or cash by having to pay it towards your nursing home rather than giving it to your kids.

Water John

Some word that the thresholds may go up in the Budget.

Baby01032012

Water John wrote: »

Some word that the thresholds may go up in the Budget.

It's the only certain thing in the budget!

Threshold will go up to at least €320k, government has committed to increase it to €500k over lifetime of this government.

Baby01032012

On the topic at hand, dwelling house relief could be used here to ensure no tax liability. Well used to great effect in this country. House can be gifted to child as long as child has no other property. There are minimum periods which both parent and child most hold onto the house.

pilly

How would you go about gifting a house that still has a mortgage attached?

Got2TurnAround

Info from Pierse Fitzgibbon solicitors website:

If a Mortgage or a Charge is registered against the property to be transferred, then in order to effectively voluntarily transfer the property from one party to another, the financial institution, the owner of the Registered Charge, may need to be joined as a party to the Deed of Transfer.

Carawaystick

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

Wouldn't the children not you have to pay stamp duty? Otherwise if you gave them money to pay that its liable to cat along with the house value?

radharc

Tilikum wrote: »

We just did this during the week.

Solicitors fees......my mate did it around €500. Still have to pay Dad's solicitor.
Stamp duty : 1% of the house.
Registration fees around €600
If the house is worth more than €280k they have to pay gift or inheritance tax not sure which?

It's absolutely joke, my Dad worked his balls off his hole life to pay for the house, then he has to give them more money so he can give it to his kids. What would happen if we/he didn't have the money to pay the stamp duty/fees?

In fairness you get €310,000 for nothing before you pay a cent tax.

I'm not pro tax by any means but CAT is one of the fairest in my opinion, otherwise rich families just hand down their wealth for generation after generation with no contribution to the society that has provided them with their wealth.

radharc

radharc wrote: »

In fairness you get €310,000 for nothing before you pay a cent tax.

I'm not pro tax by any means but CAT is one of the fairest in my opinion, otherwise rich families just hand down their wealth for generation after generation with no contribution to the society that has provided them with their wealth.

CAT is the the most unfair tax that has ever been. It's an abomination of a tax and should imo be illegal. Taxing the money that's already been taxed multiple times that's the contribution there already. A family should be able to pass on their wealth to the next generation without any interference from the state. Every cent of that money should be benefitting the family.

This is the case in many counties there there are no inheritance taxes at all.

conorhal

Got2TurnAround wrote: »

Hi, if I were to transfer ownership of my house (PPR) to my children. There is no mortgage on the property. I am asking questions regarding CAT/CGT on the Taxation forum but it looks like neither is applicable in my case. I am just trying to calculate other costs. So far I have

Solicitors fees: €3,000
Stamp duty: 1% of house value
CAT/CGT: n/a

Anything else? Thank you in advance.

The child (in reality you can gift a property to anybody though) will have to pay stamp duty 1%

You will have to pay capital gains tax at 33%, Gift tax (also 33%) also applicable but it is an either/or with CGT. If the property has not appreciated or it is in negative equity then no CGT is applicable, but I'd speak to a tax expert if I were you to determine if gift tax might then come into play.
Is the property worth more now then when you aquired it?

Inheritance tax entitlements for the person you gift the property to remain uneffected by the gift.

You should also be aware that there are terms and conditions.
The person you gift the property to must have been living there as their primary residence for the past 3 years and once you gift the property to them they cannot sell it for a further 6 years unless they do so to buy another primary residence.

conorhal

conorhal wrote: »

The child (in reality you can gift a property to anybody though) will have to pay stamp duty 1%

You will have to pay capital gains tax at 33%, Gift tax (also 33%) also applicable but it is an either/or with CGT. If the property has not appreciated or it is in negative equity then no CGT is applicable, but I'd speak to a tax expert if I were you to determine if gift tax might then come into play.
Is the property worth more now then when you aquired it?

If its his primary residence then its exempt from CGT regardless of what its worth. If the value is under the thresholds (which appears to be suggested by the "NA") then no CAT is liable.

Its not an either or with CAT and CGT either both could be payable on a transaction (one by the giver and one by the receiver), it very much depends on the details.

conorhal

Lyra Shy Kindergarten wrote: »

If its his primary residence then its exempt from CGT regardless of what its worth. If the value is under the thresholds (which appears to be suggested by the "NA") then no CAT is liable.

Its not an either or with CAT and CGT either both could be payable on a transaction (one by the giver and one by the receiver), it very much depends on the details.

CAT and CGT is a bit of a grey area depending. I'd missed the fact that the property was the family home, I thought it might have been in investment property.

webpal

Would it make a difference if this was the childrens PPR also?

conorhal

webpal wrote: »

Would it make a difference if this was the childrens PPR also?

I think it's a requirement?

webpal

Is the tax applicable then if the children's PPR also? I might be wrong but I dont think its applicable if its the childrens PPR for over 5 years.