CAT instalments

Andy321

Hi,

My Mam inherited a house and it was agreed I could buy it from her. The plan being that I pay the six figure CAT, then transfer ownership with a burden to pay the outstanding amount in a few years time using a mortgage.

I see it’s possible to pay CAT by statutory instalments using 60 monthly instalments with a daily interest rate of .0219%.

However I believe that if I transfer ownership from my Mam to me then the full amount of CAT will be due in full immediately.

I’ve been unable to secure a loan to pay the CAT so paying by instalments is the only viable option I can see.

Anyone know if my assertions are correct? Is it possible to transfer liability of CAT? And what the best options would be?

Thanks!

Calahonda52

The CAT liability is your mam's so if you buy the house from her, can she not pay the CAT from the proceeds?

Andy321

Calahonda52 wrote: »

The CAT liability is your mam's so if you buy the house from her, can she not pay the CAT from the proceeds?

I can’t get a mortgage from the bank now due to Covid, also couldn’t get a loan to cover the CAT. However I could manage to pay CAT via instalments.

Calahonda52

The CAT is not yours to pay and if you pay it, there is not much room in Threshold B before you burden her with more tax

Andy321

Calahonda52 wrote: »

The CAT is not yours to pay and if you pay it, there is not much room in Threshold B before you burden her with more tax

Thanks, never thought of that, paying the CAT would be in counted as Group B and liable for CAT

barneystinson

Calahonda52 wrote: »

The CAT is not yours to pay and if you pay it, there is not much room in Threshold B before you burden her with more tax

As the OP has explained it, the CAT he pays for her would form part of the consideration for the property - see reference in the OP to transferring ownership with a burden to pay the amount "outstanding", which I read as the property value minus the amount he has already paid which is used towards her CAT liability - unless he's planning to pay her CAT bill AND pay full price for the property too, which seems unlikely.

Andy321

barneystinson wrote: »

As the OP has explained it, the CAT he pays for her would form part of the consideration for the property - see reference in the OP to transferring ownership with a burden to pay the amount "outstanding", which I read as the property value minus the amount he has already paid which is used towards her CAT liability - unless he's planning to pay her CAT bill AND pay full price for the property too, which seems unlikely.

Thanks for that, all a bit of a minefield.

Yes you’re quite right that’s the plan, to pay the full market value of the property; CAT and the outstanding amount by way of a burden.

At the moment the only way that would be financially possible for me is by paying CAT by 60 monthly instalments. Then paying the outstanding amount in say 5 years with a mortgage.

Do you think it would be possible to somehow transfer the CAT liability to me and still pay by statutory instalments over 60 months?

I note that if the property is sold the outstanding CAT in due in full immediately. I suppose this scuppers the whole plan or would there be a way around this?

Thanks

barneystinson

Andy321 wrote: »

Thanks for that, all a bit of a minefield.

Yes you’re quite right that’s the plan, to pay the full market value of the property; CAT and the outstanding amount by way of a burden.

At the moment the only way that would be financially possible for me is by paying CAT by 60 monthly instalments. Then paying the outstanding amount in say 5 years with a mortgage.

Do you think it would be possible to somehow transfer the CAT liability to me and still pay by statutory instalments over 60 months?

I note that if the property is sold the outstanding CAT in due in full immediately. I suppose this scuppers the whole plan or would there be a way around this?

Thanks

This doesn't need to be overly complicated. At the end of the day, you want to pay an amount of money in exchange for obtaining ownership of the house. There's no element of gift between you and your mother unless that amount doesn't equate to a reasonable market value.

You don't have the money, or the means to borrow it, right now, but you can effect a transfer with the consideration deferred or staggered in whatever way works for the two parties.

Is there some reason that you can't just set up a standing order to your mother, which will form part of your purchase of the property from her, to allow her to pay the CAT over the 60 months, with a legal agreement that she'll transfer ownership of the property to you, subject to a burden for Y amount, once you've paid X amount (the CAT).

It's hardly that difficult a square to circle, but you'll need to both take legal advice on it.