Selling property to children

CuriousDuo

Our son, in his mid twenties, is in permanent employment and has savings but with the restrictions on bank lending he is limited to a mortgage of about 160k. So between savings and the mortgage he could only by a property for about 185k.
We have an investment property which we are considering selling to him in order for him to get on the property ladder.....and move out of our house.
The property is valued at c. 250k, any suggestions on how best we could transfer the property to him that will give home a roof over his head and be tax compliment and efficient?
All suggestions greatly appreciated.

exaisle

CuriousDuo wrote: »

Our son, in his mid twenties, is in permanent employment and has savings but with the restrictions on bank lending he is limited to a mortgage on about 160k. So between savings and the mortgage he could only by a property for about 185k.
We have an investment property which we are considering selling to him in order for him to get on the property ladder.....and move out of our house.
The property is valued at c. 250k, any suggestions on how best we could transfer the property to him that will give home a roof over his head and be tax compliment and efficient?
All suggestions greatly appreciated.

May I ask what relevance you moving out of your house has if you're selling him your investment property?

galvo_clare

exaisle wrote: »

May I ask what relevance you moving out of your house has if you're selling him your investment property?

Think they mean he'll move out of their house. i.e. leave the nest.

exaisle

galvo_clare wrote: »

Think they mean he'll move out of their house. i.e. leave the nest.

Ah...gotcha.

Firstly, if you sell him the investment property valued at €250k for €185k, it constitutes a gift for Capital Acquisitions Tax purposes of €65k. This will be taken into account if he receives an inheritance from either of you when you pass on. The threshold for inheritances from parent to child is €310,000 so when you pass on you could leave him estate worth €245,000 before he'd be liable for Capital Acquisitions Tax.

The difficulty here is that while you might sell your son the investment property for €185,000, because the transaction is between connected parties, you would be required to get it valued. Presumably, the valuer would say it's worth €250,000. That is the sum that you would be considered to have sold it for as far as Capital Gains Tax is concerned. So, if you bought it for less than €250,000, you could find yourself with a Capital Gains Tax liability.

Best pay a visit to an accountant...

Lockedout2

Firstly is the property what he is looking for?

You have the option of selling the investment property to a 3rd party and giving him the €65k to purchase a property of his choosing.

As outlined CAT will apply to the difference between the market value and agreed price. €3k small exemption will apply.

CuriousDuo

Thank you so much for the quick responses. We had a feeling this would be the situation.
We presume there is no other way around the tax liabilities, or is there?
Seems rather harsh when all we are trying to do is help our son get a house of his own.

Is an accountant the best person to visit or a financial advisor, or even a solicitor?

exaisle

CuriousDuo wrote: »

Is an accountant the best person to visit or a financial advisor, or even a solicitor?

Yes..an accountant or taxation consultant. Financial advisor is a bit vague and unless it's a solicitor who specialises in taxation, I'd steer well clear...