Parents house

tritriagain

We are selling our family home and want to take over my ageing parents house while building them a granny flat. They want to give us the house and we will obviously pay for the extension. How are we fixed tax wise does anyone know. I remember reading somewhere that our tax liability could be reduced because they are staying in the house. Or can I buy house off the. And let them put extension on . Would this be allowed under tax rules. Looking for most tax efficent way of doing this. Thanks in advance.

Claw Hammer

tritriagain wrote: »

We are selling our family home and want to take over my ageing parents house while building them a granny flat. They want to give us the house and we will obviously pay for the extension. How are we fixed tax wise does anyone know. I remember reading somewhere that our tax liability could be reduced because they are staying in the house. Or can I buy house off the. And let them put extension on . Would this be allowed under tax rules. Looking for most tax efficent way of doing this. Thanks in advance.

You need proper tax advice. A lot depends on how valuable the house you are buying is. Whether or not there have been previous gifts of land or money et cetera. It may also be the case that there be different tax treatment if your spouse is given the gift as well. It may well be more tax efficient for you to pay over the equity from your own house to your parents to reduce the value of the gift with your parents then spending the money on the extension. You will have to talk to a competent professional to ensure you do not get yourself into a knot.

Sleeper12

tritriagain wrote:

We are selling our family home and want to take over my ageing parents house while building them a granny flat. They want to give us the house and we will obviously pay for the extension. How are we fixed tax wise does anyone know. I remember reading somewhere that our tax liability could be reduced because they are staying in the house. Or can I buy house off the. And let them put extension on . Would this be allowed under tax rules. Looking for most tax efficent way of doing this. Thanks in advance.

Like claw hammer says proper tax advice from a professional or at least the citizens advice counter.

The most tax efficient way would if be if you lived there with your parents for a few years. I think it is 3 years. At this stage you are officially living in the family home. I THINK you don't have to pay stamp duty taxes once you have done this.

I'm pretty sure I most of that correct but you need to know for certain & not just from a fool (me) on boards.ie. It's too important not to get proper advice. There are other forums that might be better help. There's an accountancy forum

tritriagain

would an accountant or solicitor be best for this advice

daheff

tritriagain wrote: »

would an accountant or solicitor be best for this advice

solicitor i would think.

Sleeper12

tritriagain wrote: »

would an accountant or solicitor be best for this advice

I believe an accountant as it's tax implications you are concerned about

Winnieacre

You would be best off talking to a tax consultant or solicitor with a good tax knowledge. The tax relief rules changed in December 2016. You can still receive a gift of a house if you are permanently disabled or over 65 years old (with conditions) but now the tax relief just applies to an inheritance in your circumstances.

Depending on the value of the house, you might be advised to pay your parents some amount for the house so that the balance is treated as a gift and tax free subject to previous gifts. It's a complicated area so do seek professional advice.

Claw Hammer

Sleeper12 wrote: »

I believe an accountant as it's tax implications you are concerned about

Very few accountants are in fact tax practitioners. This would be beyond most accountants.

Sleeper12

Claw Hammer wrote:

Very few accountants are in fact tax practitioners. This would be beyond most accountants.

I'm no expert. An accountant seemed the logical one to me but that was just a gut instinct. My own accountant looks after taxes from my sales and rentals and inheritance / gift tax.

You are probably correct about the solicitor because there's more than tax implications

I would think that it's a lot more complicated than op has said. Is op going to buy parents house? Or is it being gifted? Is op paying for the granny flat? Will op even get planning permission for the granny flat (probably not if it is a separate dwelling & not connected to the original house). Is op buying out siblings shares?

It could be a messy mix of buying & selling with part gift thrown in.

Definitely too messy to rely on advice from me

AppleBottle

Get in contact with an accountant/tax consultant.

There are too many factors here which would need to be considered to get an idea of your tax bill, many of which have been mentioned already.

daheff

daheff wrote: »

solicitor i would think.

An accountant who specialises in tax is what's required. A solicitor will have a very limited knowledge (if any) of tax management.

beauf

Check out the fair deal rules also.

4ensic15

Keenan Rhythmic Plywood wrote: »

An accountant who specialises in tax is what's required. A solicitor will have a very limited knowledge (if any) of tax management.

There are some solicitor who specialise in tax and estate planning, which is what is happening here. Inter-generational transfer of assets happens quite a lot. The common or garden solicitor down the road might not know a lot about it but there are specialists.

tritriagain

tritriagain wrote: »

....... How are we fixed tax wise does anyone know..........

There are lots of variables as folks have mentioned, at a high level...

- €310,000 is the threshold applying to all gifts and inheritances received by an individual from both parents
- Gift Tax rate is currently 33% (applies to the amount in excess of the €310K)
- In financial planning terms if this was planned in advance saving regularly for at least eight years through a life assurance savings plan, that was arranged under Section 73 Capital Acquisitions Tax Act 2003 might be beneficial as a savings plan arranged under that act does not create another gift tax liability.

A decent QFA or tax specialist will ascertain the variables under the fact finding stage and make a recommendation or two.