Gift tax - Paid excess consideration

JansheerKahn

Two connected persons A & B enter an agreement for the sale of a property with a market value of €100,000.
B pays A €200,000.
For CGT, market value applies and A’s gain is computed using market value as the deemed proceeds.
B takes the market value as his base cost.
As market value applies for CGT, regardless of the level of proceeds, where is A going to get taxed on the additional €100,000 over and above market value?
Gift tax applies to benefits where a person receives a benefit otherwise than for full consideration.
Can you let me know the Section in the CATCA that will tax this €100,000 as a gift as I need to be able to reference a section and am tearing my hair out!!
I know it must be a gift but want to be able to prove so for tax purposes..

Calahonda52

what about from here, which refers to the earlier acts:

http://www.irishstatutebook.ie/eli/2003/act/1/enacted/en/print#sec28


Gift deemed to be taken.

[CATA 1976 s5: FA 1993 s121(1) (part); FA 1994 s147 (part)]

5.—(1) For the purposes of this Act, a person is deemed to take a gift, where, under or in consequence of any disposition, a person becomes beneficially entitled in possession, otherwise than on a death, to any benefit (whether or not the person becoming so entitled already has any interest in the property in which such person takes such benefit), otherwise than for full consideration in money or money's worth paid by such person.

JansheerKahn

Calahonda52 wrote: »

what about from here, which refers to the earlier acts:




Gift deemed to be taken.

[CATA 1976 s5: FA 1993 s121(1) (part); FA 1994 s147 (part)]

5.—(1) For the purposes of this Act, a person is deemed to take a gift, where, under or in consequence of any disposition, a person becomes beneficially entitled in possession, otherwise than on a death, to any benefit (whether or not the person becoming so entitled already has any interest in the property in which such person takes such benefit), otherwise than for full consideration in money or money's worth paid by such person.

Thanks- but the gift element here is the excess consideration of €100,000 paid over and above market value.
Does this fall within those sections?

barneystinson

JansheerKahn wrote: »

Thanks- but the gift element here is the excess consideration of €100,000 paid over and above market value.
Does this fall within those sections?

Of course it does. They've become beneficially entitled in possession to 200k, and they didn't give full consideration for it - they only gave money's worth (the property) of 100k. Simple.

Calahonda52

JansheerKahn wrote: »

Thanks- but the gift element here is the excess consideration of €100,000 paid over and above market value.
Does this fall within those sections?

Whats driving this discussion
Is your client trying to claim that it is not a gift and thus bury 100k?

barneystinson

Calahonda52 wrote: »

Whats driving this discussion
Is your client trying to claim that it is not a gift and thus bury 100k?

Pretty sure it's a student...

barneystinson

barneystinson wrote: »

Of course it does. They've become beneficially entitled in possession to 200k, and they didn't give full consideration for it - they only gave money's worth (the property) of 100k. Simple.

Market rate/value is what someone is willing to pay.

If market rate for your house is 100k and two people (strangers) enter a bidding war and ends up sold for 200k so you really think there would be a gift tax? Not a chance.

If someone wants to overpay for something that’s their business.

Peregrinus

Ridge Agreeable Martini wrote: »

Market rate/value is what someone is willing to pay.

If market rate for your house is 100k and two people (strangers) enter a bidding war and ends up sold for 200k so you really think there would be a gift tax? Not a chance.

If someone wants to overpay for something that’s their business.

OP stipulates that the transaction is between two "connected persons". Which means that for tax purposes the price they agree between themselves will be ignored, and the Revue will interpose the price that the property would fetch in the open market between a hypothetical willing buyer and a hypothetical willing seller, unconnnected with each other, and each seeking to act to their own best advantage.