Parents Gifting Home

celt262

Hope someone can advise on below. I cannot get my head around the rules and regs I see online in relation to gifting.

Parents want to gift me their home and build granny flat. I own my home and will sell which will just about cover mortgage.

I have recieved no previous gifts. Do i have to pay tax as value is below threshold for gifting.(confused on what I read online)

Is there implications if they have to go into state care at any stage.

I will be visiting solicitors next week but curious to see where I stand over weekend.

Heart Break Kid

Depending on the value, could probably effect you on inheritance tax. An option could be to buy it from your parents at a nominal value.

Water John

Not up to date with the Nursing Home Scheme but TMK if they have to do in within 5 years, a clawback on their assets would apply. It would be taken that they divested their assets when they needed them.
Both sides need solrs from diff practices. Your parents need ind legal advice.

I think there is no way to avoid ind valuation for tax return purposes. Even if their is no tax due.

celt262

Heart Break Kid wrote: »

Depending on the value, could probably effect you on inheritance tax. An option could be to buy it from your parents at a nominal value.

Value won't be an issue less than 200k

Water John

Who is building and owning the Granny flat? Issue to consider.
Suggest looking at you build and grant them lifetime, right of residence.

celt262

Water John wrote: »

Not up to date with the Nursing Home Scheme but TMK if they have to do in within 5 years, a clawback on their assets would apply.

That would be my concern.

celt262

Water John wrote: »

Who is building and owning the Granny flat? Issue to consider.
Suggest looking at you build and grant them lifetime, right of residence.

That would be the plan.

Water John

Would it still work out as good value for you even if there was a clawback? I presume you could get a further mortgage loan to pay it if necessary.

celt262

Water John wrote: »

Would it still work out as good value for you even if there was a clawback? I presume you could get a further mortgage loan to pay it if necessary.

Would have to look into that in detail.

Calahonda52

celt262 wrote: »

Hope someone can advise on below. I cannot get my head around the rules and regs I see online in relation to gifting.

Parents want to gift me their home and build granny flat. I own my home and will sell which will just about cover mortgage.

I have recieved no previous gifts. Do i have to pay tax as value is below threshold for gifting.(confused on what I read online)

Is there implications if they have to go into state care at any stage.

I will be visiting solicitors next week but curious to see where I stand over weekend.

How are your folks fixed from a State pension perspective.

http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_non_contributory.html

s7ryf3925pivug

Heart Break Kid wrote: »

Depending on the value, could probably effect you on inheritance tax. An option could be to buy it from your parents at a nominal value.

No, the difference between the value and the payment would still count towards gift allowance.

You don't need to pay tax until you go over the threshold, but the amount is cumulative. The allowance is for the total value of gifts received over your lifetime. The value of the house -3k will count. You can receive 3k a year from parents tax free. Also you don't need to count normal levels of financial support while in college, though you mught if you were older or went beyond level 8, don't remember.

celt262

Calahonda52 wrote: »

How are your folks fixed from a State pension perspective.

http://www.citizensinformation.ie/en/social_welfare/social_welfare_payments/older_and_retired_people/state_pension_non_contributory.html

House value would be approx 120k from reading the attached it shouldn't affect pension. Would I be correct in saying that?

s7ryf3925pivug

If they go into care within five years the house would still be considered their asset for the purposes of fair deal contributions. After that time it would not.

Glass fused light

Talk to a tax accountant as well as the solicitor, on both your and their tax situations. There was a tax efficient way (tax free) if you lived in the property for a specified number of years. As pointed out you would also need to examine the impact on the parents from a health care and medical costs on the disposal of the asset.

On a practical level even if your parents are fit and able now, spend some time with an OT and/or contact age action or the wheelchair association about designing the granny flat to cope with someone who is becoming less mobile and using a zimmer frame or is in a wheelchair. Simple stuff like designing in space now, can make the transition much easier. Eg pull-out drawers for any storage below waist level, hold bars in the bathroom and a wet room shower that can be used with a carer in the room etc And if possible add a second bedroom with a jack&jill bathroom so if necessary you can have a hospital bed setup in one room or just that they will not end up waking each other up for loo brakes at night.

niallb

Clark Clever Roadway wrote: »

If they go into care within five years the house would still be considered their asset for the purposes of fair deal contributions. After that time it would not.

And if one of them went into care within 5 years, 50% of the asset value would be taken into account.

If 120k is the value, then 7% p/a on an extra 60k is about an extra €80 contribution to nursing home care per week.

A tax accountant and solicitor should really be involved from an early stage!
I'm digging through something similar myself at the moment, but definite answers are slow to come.

The asset value might be able to be offset against the value of a lifetime interest in the home as it's something they still have the enjoyment of,
though I believe CAT will have to be paid on that value eventually.

You do need to get a proper valuation on the property, and before you receive it and build the granny flat.
If they build it, the increase in property value would be their asset.

The value of the lifetime interest / right of residence is in a table on revenue.
This page has some more information on it.

I'm not sure how it would work if they went into care after 4 years though.
I suspect the asset would continue to be used in the assessment even after the 5 years had elapsed,
but I'd love to see something solid about it if anybody has experience of it!

beauf

If they sell their primarily home within the 5yrs it changes to cash assets not a home. The limit of 3yrs no longer applies to cash. Then it's 7.5% of their portion of the cash asset as long as they are they are in a home. Cash above 37k that is.

Just to be aware.