Buying from parent - tax implications

Audioh8

Hi,

What are the implications to be considered if my partners father purchases a property and then was to sell it on to her when she eventually gets mortgage approval.

She is applying for mortgage in her own name.

Father recently sold a property in Dec 2020 so has the funds to make such a purchase.

We are not married so the purchase would be in her name. I would be providing a gift within the group c threshold to her in order to aid her with the purchase.

Is it also possible for her to receive multiple gifts from friends under the group c threshold, eg if my mother was to gift her as well.

Thanks in advance

Henry Ford III

I'll move this to the tax forum later.

p.s. If the sale is at market value I can't envisage a problem.

athlone573

Stamp duty and solicitors fees paid twice

Gift tax as you have mentioned (on anything not done at market value)

If ye break up it could get messy

The J Stands for Jay

If it is sold for less than market value, the difference between the sale price and market value will be assessable for CAT.

DataDude

Agree with posters above. On the CAT thresholds, limits are cumulative rather than per person. So she can cumulatively inherit €16,250 from all non-relatives in her life tax free. Not €16,250 from every non-relative who’ll give her money.

EDIT - should add that she can get €3k from anybody each year without it having any impact at all on CAT. So you could give her €19,250. Your mum give her €3,000, someone else €3,000 etc.

Audioh8

McGaggs wrote: »

If it is sold for less than market value, the difference between the sale price and market value will be assessable for CAT.

And with the fact she is the daughter, would the difference be deducted from the life time CAT exemption rather than the father being hit with a tax bill?

The J Stands for Jay

Audioh8 wrote: »

And with the fact she is the daughter, would the difference be deducted from the life time CAT exemption rather than the father being hit with a tax bill?

The father will have CGT to pay on any increase in market value over what he paid for it, the daughters gain will go against her lifetime exemption.

Henry Ford III

THREAD MOVED.

Peregrinus

Important information missing from the OP; when the daughter buys the house from the father, will she pay (a) whatever price the father paid for the house; (b) the open market value of the house at the time of the purchase by the daughter; or (c) something else?

(All going well, the daughter will get prompt mortgage approval, the second sale will follow close upon the first, and there will be little or no difference between the amount the father pays for the house and its open market value at the date of the sale to the daughter. But all will not necessarily go well.)

Audioh8

Peregrinus wrote: »

Important information missing from the OP; when the daughter buys the house from the father, will she pay (a) whatever price the father paid for the house; (b) the open market value of the house at the time of the purchase by the daughter; or (c) something else?

(All going well, the daughter will get prompt mortgage approval, the second sale will follow close upon the first, and there will be little or no difference between the amount the father pays for the house and its open market value at the date of the sale to the daughter. But all will not necessarily go well.)

The purchase by the daughter will ideally be done as soon as possible and therefore hopefully at similar price to what was originally paid by her father. In the current market time is truly of the essence.

However, if complications arise then she will be paying market value I would envisage as the father will not be opening himself to a significant loss if at all possible.

This leads to one final query, if the father was to sell below market value, for example 30,000. Could that be gifted back to the father from the daughter? Therefore avoiding the CGT he would have been due to the pay on the price reduction. Thanks again for all the advice.