CAT when house is gifted to 2 siblings?

baby fish

If a parent gifts a house valued at somewhere between 250k - max 350k to 2 children (and parent continues to live in the house), what are the tax implications of this situation?

Is the value divided by 2, so 50% share for each child, so a house valued at 350k is worth 175K for each child. This is then within the group A threshold for CAT , 335k?

So no CAT payable for either sibling?

Geuze

Correct, unless the adult children have already received gifts in their category A allowance.

Also, I think you could argue that giving the parent a lifetime right to live in the house reduces its capital value.

Greengrass53

https://www.boards.ie/discussion/2058329654/cat-when-house-is-gifted-to-2-siblings

Yep. No tax implications.

niallb

https://www.boards.ie/discussion/comment/121573212#Comment_121573212

No argument needed. Revenue has a chart on the value of a lifetime right to reside. It varies depending on the age of the person at the time they are granted the right.

baby fish

https://www.boards.ie/discussion/comment/121573228#Comment_121573228

What does this mean in simple terms please for both the parent and children, if the parent was approx 78 yrs old.

niallb

You need to check the Revenue site yourself as there are too many variables.

Broadly speaking, they consider it about 10% of current market value at the time of the grant of the right. It rises to 20% if food and bills are covered for the rest of their life.

There is an adjustment based on age and CAT is then charged on the same percentage of the current market value at the time they pass away.

However, there are two different legal forms of staying in the home. One is a non exclusive "Right to Reside" and the other is a "Lifetime Interest". You should really talk to a tax advisor with inheritance experience to find the approach which best suits you all.

Taxes

As the dwelling is being transferred by way of gift as opposed to an inheritance, please also consider the potential stamp duty and capital gains tax implications.

baby fish

Thank you all for replies, I will arrange to see tax specialist on Monday.

https://www.boards.ie/discussion/comment/121574851#Comment_121574851

I wasn't aware of this, maybe I have it wrong, but the parent who continues to live in the gifted house might or (will always?) have to pay CAT as they continue to live in the house for the rest of their life?

But could you just clarify,

1. The beneficiary of a property (the child) Pays CAT, if a parent live in the gifted house and the child lives elsewhere? Is this a once off payment or yearly? Maybe I have this wrong, is the CAT when the child lives in the house too?
2. Is there any situation where the parent gifts the house and continues to live in the house without having to pay CAT when the child lives else where?
3. I read on revenue.ie about the right to revoke a gift? Can a gift from parent to child( in particular a house where the parent continues to live) always be revoked or can this right be declined when signing on the dotted line in the solicitors, and so the power to revoke this gift no longer exists?
4. If its declined, would that mean it can never be revoked, or is there a option to say I didn't fully understand what I was agreeing to? I want to revoke.

Thank you