CAT & CGT Query

cr-07

Hi everyone,

Just looking to get some insight into this. Obviously I’m going to get advice from an actual solicitor, but just wondering does anyone have any comments about the following:

So myself and my wife are currently trying to buy a house. My Aunt subsequently has her house for sale, which is valued at €210,000. She has not lived in this house in roughly 20 odd years, as she currently lives in England. The house has been rented accommodation since then, with my mother acting as the “property manager”.

My mother has never taken any form of payment from my Aunt, and my mother has also looked after the upkeep of the property (new kitchen etc..). The house has been breaking even with rent/mortgage, so no funds has entered my mothers pocket, she has actually put more money into it rather than getting money out, meaning my mother is “owed” a substantial amount, circa €60,000 or so.

Myself and my wife aim to pay my Aunt €140,000 for the house (mortgage approved), with the €60-70000 “discount”, as my Aunt has agreed that she owes my mother these moneys, so my mother is applying that money to getting the house at a discounted price.

So my question is, will there be any CAT applied in buying the house, as the €60,000 could be seen as a gift from my Aunt?

Will there be CGT applied in the selling of the house, as it is not my Aunts main abode?

Any comments & suggestions will be greatly appreciated.

DubCount

Might be worth a chat with an accountant as well as a solicitor.

IMHO the transaction will be treated at the value of an arms length value for tax purposes. This means your aunt will pay CGT on the full value of the property (210k). You and your wife will be deemed to have received the 60k gift which will mean CAT (for your wife anyway). There might be a better way to receive the gift which saves some tax, so an hour with your accountant could be money well spent.

Caranica

You say the property has been breaking even rent/mortgage but what of income tax? If your mother was acting as the agent did she file tax returns for the property? I would imagine that the possibility of CGT will draw Revenue's attention to the fact that it's been long term rented.

Geuze

The selling aunt may owe CGT, if she makes a gain on the sale, it depends what she paid for the house.


The mother has, in effect, loaned money to the aunt? Which has been spent on the house? You may have to get legal advice on that side of it. The aunt owes the mother back.