Swapping House Tax

thereiver

If you swap a house with someone what tax do you pay? I know stamp duty is 1 percent Fo you pay Cgt tax ?

Do you pay tax on the difference in value

Eg one house is worth 120k the other house is worth 150k

I understand it's like selling a house eg there's 2 solicitors needed

dennyk

For CGT, it'd be the equivalent of you selling your house for a price equal to the fair market value of the other party's house, and vice versa. The usual CGT exemptions and/or adjustments would apply.

If the transaction is not an arm's-length transaction (e.g. both parties have a pre-existing personal relationship) and there is a non-negligible difference in the value of the two properties, then CAT and additional CGT might apply. For example, if parties A and B are related, A has a house worth €200k, and B has a house worth €300k, if they trade houses without any additional payments, then due to the difference in property value, that might be considered a €100k gift from B to A that would be liable for CAT, and in addition B might be assessed CGT based on the fair market value of the house they disposed of rather than the value of the asset they received in exchange. Under some circumstances the additional CGT paid by the disponer on the disposal might be able to be claimed as relief on CAT by the beneficiary.

There's no CGT if it's the principal private residence of each party.

There will be a capital acquisitions tax issue, which may be covered by the small gift exemption and relevant group threshold (it all depends on who is swapping with who)

thereiver

I understand the tax depends on who is the other person eg is the other person married to the owner of the house they exchange with .

dennyk

https://www.boards.ie/discussion/comment/122068744#Comment_122068744

Being married would change things somewhat as well. No CAT would generally be due on gifts between spouses, so that wouldn't be a consideration, but married couples living together can generally only have one PPR, so unless the properties involved were previously their respective individual PPRs and the exchange happened a short time (12 months or less) after they began cohabitating, there might be some CGT owed, since at least one of those houses involved likely wouldn't qualify for the full PPR exemption.

thereiver

Im not married so that does not apply to me does that mean I pay CGT tax of 33 per cent on the increase in value of the house since when it was bought?

dennyk

If your current house is and always has been your PPR (i.e. the place you actually live) since you've owned it, then you'd pay no CGT regardless, as you'd have the full PPR exemption. (Note that a property which was your PPR at any point is always considered your PPR during the last year of ownership, even if you didn't actually live there, to give folks time to sell their properties after moving without affecting their CGT exemption…) If it was not always your PPR, then your exemption would be prorated based on how long you actually lived in the property, so you might owe some CGT if you dispose of the property for a gain. If it was never your PPR, you'd receive no exemption (not even the last year of ownership) and you'd pay CGT on the full gain.

How much CGT you owe would normally depend on the difference between the value of the property when you acquired it and the value of the property that you are being given in exchange for it. However, as previously noted, if this isn't an arms-length transaction and the property you're being given in exchange is worth significantly less than the fair market value of your property, you might be assessed CGT based on the fair market value of your property instead of the value of the property you're receiving. The other party in that case might also owe CAT on the difference in value, as it would be considered a gift from you to them, but that CAT could potentially be offset by the CGT that you pay. If you didn't pay any CGT (e.g. because you availed of the PPR exemption), though, then there'd be nothing to offset the CAT and the other party would have the full CAT liability.

thereiver

I know what cgt is ,I don't know what Cat liability is

DubCount

https://www.boards.ie/discussion/comment/122078209#Comment_122078209

CAT is Capital Acquisitions Tax. It covers both "Gift Tax" and "inheritance Tax", but here its really tax on gifts that might give rise to a liability.