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Capital gains tax question house sale that is co owned with parent

  • 15-02-2018 3:14am
    #1
    T00038866
    Registered Users, Registered Users 2 Posts: 3 ✭


    Hi all
    Bought a house in 2015 for 204200. My father put up half and I put up half so it's owned 50 50 but I have been living there since and paying off his half. The house is now worth in the 280k to 290k mark and I am looking to move out into the country. It's currently my principal private residence but not my father's. What are the possible CGT implications if the house sells. If my father 'gifted ' me his share of the house it would fall beneath the cat a threshold for capital acquisitions tax and would leave me free to sell without having to pay CGT??? Any advice greatly appreciated


Comments

  • #2
    99rory
    Registered Users, Registered Users 2 Posts: 3 ✭99rory


    Looks like a loose arrangement with you and your father up to now - could the payments be considered rent for him allowing you to live in the house (his 50% share of it). They were either capital payments to buy out his half, or rental payments for ongoing living in the house.

    If they were capital payments then: (a) you received a gift each year equal to half the market rent of the property for CAT purposes, this may be below the small gift exemption of €3k, and (b) your father made a part-disposal of his interest in the property each year and would have been subject to Capital Gains Tax on any gains made. It looks like nothing formal was done up to now but you'd want to come to a position on that point first. (There could also be stamp duty implications on the sale of the interest in the property from your father to you.)

    As you say, your father should be able to give you his part of the house. He will pay CGT on any gains made. (There may be a temptation to decide that a disposal has already occurred in the past when values were lower so as to minimise your father's liability to CGT. Note that market value amounts must be applied to CGT on any disposal by your father, but it might be tricky to say that a disposal really occurred if there is nothing to back it up (a simple agreement on paper though stating that a transfer is occurring should suffice to be as good as a contract).

    You might be below the CAT thresholds so not problem when you receive your father's interest (technically you still need to file a return once a certain percentage of the threshold is used up). When you go to sell the house then you should be able to get full Principal Private Residence relief.

    Hope this helps


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