Any CAT/CGT if I give a property to my sons?

stevemce

In 2004 I inherited a property (incl. 10 acres of land) in Donegal.
The property was valued at EURO 52k in 2004.

I want to transfer ownership of the property (i.e. give the land for free)
to my 3 sons to reduce my inheritance tax liability.

We are all resident in the UK,
the Donegal property is effectively a holiday home for us.

I have investigated the UK side of this and the plan is viable
(I know about the 7 year rule WRT UK inheritance tax).

On the Irish side, under Irish law, will there be any CAT/CGT
or other taxes to pay for either myself or my sons?

Thanks
Steve

Victor

I don't know for certain, especially as you are UK resident, best talk to a solicitor who deals with this type of thing. I'm not sure about the UK situation, but the Revenue Commissioners look at gifts over the whole lifetime, not just at inheritence.

I imagine the Inland Revenue will treat the property as domestic to the UK for tax purposes (as the Revenue Commissioners would treat it here). Certainly on the Irish side they will want to know tax has been paid somewhere. Parent to child CAT transactions have quite generous limits here and there are some reductions in stamp duty also. You might take a look at www.revenue.ie

You will have some expenses, solicitor, land registry and a modest amount of stamp duty (based on current market value).

You will need to decide how you give this to them - separate parcels or land, joint owner ship, etc.

dermot_sheehan

stevemce wrote:

In 2004 I inherited a property (incl. 10 acres of land) in Donegal.
The property was valued at EURO 52k in 2004.

I want to transfer ownership of the property (i.e. give the land for free)
to my 3 sons to reduce my inheritance tax liability.

We are all resident in the UK,
the Donegal property is effectively a holiday home for us.

I have investigated the UK side of this and the plan is viable
(I know about the 7 year rule WRT UK inheritance tax).

On the Irish side, under Irish law, will there be any CAT/CGT
or other taxes to pay for either myself or my sons?

Thanks
Steve

This really requires professional advice.


The question is how you intend to dispose the property towards your children? Do you plan a deed of variance of your father's will or has his estate already been administered and the property transferred to yourself and you therefore seek to simply gift the property to your children.

With regard to CGT, the CGT clock is reset at death in Ireland, that is any capital gains due would be from your father's death. A credit against CAT for any CGT paid is allowed.

For each of your children in 2006 you have a €478,155 CAT threshold, so it's unlikely the property would be subject to CAT if you're making the deposition. If you are making it by way of deed of variation, then it is in effect your father's estate making the deposition so the CAT threshold would be €47,815.

If your making the deposition yourself, it's unlikely to be liable to CAT, however CGT would be paid. Since the property is in Ireland, it's liable to Irish CGT according to the income tax treaty. It's also liable to UK CGT, a credit can however be taken against the UK CGT for the Irish CGT paid in accordance with Article 14 and 21(3) of the Ireland-UK Tax Treaty.

jawlie

It's not really possible to give concrete advice.

Firstly, a 2004 valuation is out of date and an up to date valuation is likely to be higher.

Secondly, you don't say if your sons are resident in the UK or Ireland, what ages they are, and where they are domiciled for tax purposes.

In the UK there is gift inter vivos arrangement whereby a gift of an asset ( very often a house ) is exempt for inheritance tax if the donor is alive seven years after the date of the gift.

Thirdly, you don't say why you want to do this now or, for example,if the reason is an attempt to avoid inheritance tax in the future? If this is, indeed, an attempt at tax planning as part of a larger picture, then advice from your tax advisors would be a better bet than advice from an anonymous web site!

stevemce

Thanks to those who replied.
You all mentioned professional advice, it has actually been quite difficult
to find someone who is sufficiently knowledgable in Irish/UK Tax law
to give me advice. Everyone I speak to wants to sell me a full-blown
IHT "solution" costing GBP 5000 plus vat.
For some reason they don't return my calls when it is just advice/guidance needed
- and I am more than happy to pay market rates for this type of
professional help.

If you know of a professional advisor who can help I would be really
grateful if you would let me have their contact details
(and why you recommend them).

Send me a private message if you prefer.

Steve