Gifting a house

Redgirl82

This might be strange one. I bought a house with my sister during the boom. 100% mortgage madness. We moved into the house and lived in it. It ended up in negative equity but we didn't care. The plan when buying, was the house would be investment and we would move out and rent it

After a few years I moved out and stopped paying mortgage. This was agreed. She never moved out, had spent money on house and wanted it....
I ended up signing over the house. She arranged with a solicitor etc so I just showed up and signed. The house was now out of negative equity but I didn't care. I just left it. The mortgage was still outstanding but seemingly the bank was willing to take my name off it.

I just got legal letter asking about gifting my daughter a house? I have to send bills etc to prove where I live and that my sister is my daughter..sounds dodgy

I am just wondering what is the normal process? am I liable for anything? thanks

Henry Ford III

1/. Don't tell any lies.

2/. Can't see how you could have any tax liability.

3/. If your sister does (possible CAT if value passed from you to her) it's her issue.

p.s. Did you expect this letter? It sounds very ropey.

Redgirl82

Henry Ford III wrote: »

1/. Don't tell any lies.

2/. Can't see how you could have any tax liability.

3/. If your sister does (possible CAT if value passed from you to her) it's her issue.

p.s. Did you expect this letter? It sounds very ropey.

I had no idea about letter...

CAT value?

I am not going to lie....I am just wondering why they would be asking for me to show she is my daughter?

banie01

Who issued the letter?
Is it from the Revenue Commissioners?

1st thing is to ascertain who is requesting this information and why.
What legal standing does the person making the request have?

doolox

The rates of CAT and allowances vary depending on the relationship of the giver of a gift to the recipient.

In your case if the house is in neg eq there should be little or no CAT liability. Your sister is paying all the mortgage now so the only time that would be in question would be the time you were paying 50-50.

Someone has mistaken your sister for a daughter which does not show a high level of professional competency.

If you want peace of mind discuss this matter with your sister, presuming she is trustworthy and not difficult to deal with, and also a solicitor.

Henry Ford III

Redgirl82 wrote: »

I had no idea about letter...

CAT value?

I am not going to lie....I am just wondering why they would be asking for me to show she is my daughter?

CAT is Capital Acquisitions Tax - on a gift or inheritance. I can't see any way that you effectively transferred wealth (made your sister any better off financially) by removing yourself from the loan.

p.s. Did a solicitor write the legal letter and if so who is their client?

SusanC10

Who is the letter from ?
Did you transfer ownership of your share of the house to your sister when you signed the paperwork ?
How long ago did this happen?
The CAT Threshold for Gifts between Siblings is approx €32,500 but any CAT is your sister's liability not yours.

Bubbaclaus

CAT is your sisters tax issue as she received the gift.

You have disposed of an asset so CGT rules apply. Deemed disposed at market value as it was disposed of to a relative.

Henry Ford III

Bubbaclaus wrote:

You have disposed of an asset so CGT rules apply. Deemed disposed at market value as it was disposed of to a relative.

There needs to have been a profit for CGT to be a consideration

Bubbaclaus

Henry Ford III wrote: »

There needs to have been a profit for CGT to be a consideration

How do you know he didnt make a profit? It is disposed at deemed market value, so there's a good chance it has increased in value since he purchased it.

homer911

Half of the equity in the house at the time of transfer would be considered a gift from you to your sister at that date.

Gifts between siblings have a cumulative tax-free threshold of €32,500. (Group B for CAT purposes)

Gifts from a parent to a child have a cumulative tax-free threshold of €320,000. (Group A for CAT purposes)

It could be an innocent mistake, but it sounds like someone is trying to pull a fast one with the Revenue..

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

Andrew Beef

Bubbaclaus wrote: »

Henry Ford III wrote: »

There needs to have been a profit for CGT to be a consideration

How do you know he didnt make a profit? It is disposed at deemed market value, so there's a good chance it has increased in value since he purchased it.

It was bought when 100% mortgages were available and it was transferred sometime in the past.

Pretty safe to assume that CGT won’t be an issue.

Bubbaclaus

Andrew Beef wrote: »

It was bought when 100% mortgages were available and it was transferred sometime in the past.

Pretty safe to assume that CGT won’t be an issue.

Should never assume things. If you bought a house in 2005 and sold now it would very likely be at a profit. Mortgage amount doesnt come into it.

Andrew Beef

W

Bubbaclaus wrote: »

Andrew Beef wrote: »

It was bought when 100% mortgages were available and it was transferred sometime in the past.

Pretty safe to assume that CGT won’t be an issue.

Should never assume things. If you bought a house in 2005 and sold now it would very likely be at a profit. Mortgage amount doesnt come into it.

Nobody mentioned selling now.

Andrew Beef

And prices haven’t surpassed their peak either.

my3cents

Andrew Beef wrote: »

W

Nobody mentioned selling now.

But it has to have a value and the OP has given away 50% of whatever the house was worth at the time they gave it away.

Andrew Beef

my3cents wrote: »

Andrew Beef wrote: »

W

Nobody mentioned selling now.

But it has to have a value and the OP has given away 50% of whatever the house was worth at the time they gave it away.

From a CGT perspective, that’s not a big deal if the property was worse less when it was gifted than when it was purchased. Which is a pretty safe bet if a 100% mortgage was involved.

my3cents

Andrew Beef wrote: »

From a CGT perspective, that’s not a big deal if the property was worse less when it was gifted than when it was purchased. Which is a pretty safe bet if a 100% mortgage was involved.

But as already pointed out if you give something away then the person who receives the gift has to pay tax on it if the value is over certain limits.

In this case its a bit ****ty to have to pay tax on something you've paid for yourself (OP's sister) which is why it looks like someone may be trying to pull a fast one.

If the OP only paid a percentage of the mortgage is there some way that it can be contrived that they only owned that percentage of the house?

Bubbaclaus

Andrew Beef wrote: »

From a CGT perspective, that’s not a big deal if the property was worse less when it was gifted than when it was purchased. Which is a pretty safe bet if a 100% mortgage was involved.

Why do you keep going on about 100% mortgages. Property prices have exceeded 2005 and earlier prices and there was definitely 100% mortgages back in 2005. A mortgage has no factor in a CGT calculation.

Andrew Beef

Bubbaclaus wrote: »

Andrew Beef wrote: »

From a CGT perspective, that’s not a big deal if the property was worse less when it was gifted than when it was purchased. Which is a pretty safe bet if a 100% mortgage was involved.

Why do you keep going on about 100% mortgages. Property prices have exceeded 2005 and earlier prices and there was definitely 100% mortgages back in 2005. A mortgage has no factor in a CGT calculation.

You seem incapable of understanding this issue;

- Nobody said that a mortgage was a factor in a CGT calculation

- Property prices have NOT reached their previous highs

- The OP got a 100% mortgage

- The OP gifted his/her share a while back

It is highly likely, and almost guaranteed, that no CGT will arise; in fact, the restricted nature of the loss will probably be mildly irritating.

Bubbaclaus

Andrew Beef wrote: »

You seem incapable of understanding this issue;

- Nobody said that a mortgage was a factor in a CGT calculation

- Property prices have NOT reached their previous highs

- The OP got a 100% mortgage

- The OP gifted his/her share a while back

It is highly likely, and almost guaranteed, that no CGT will arise; in fact, the restricted nature of the loss will probably be mildly irritating.

So you are assuming house was purchased at peak? You are making some big assumptions there.

OP, ignore Andrew. You should consider the CGT implications of the disposal. Should never assume that everything is hunky dory based on assumptions.

Henry Ford III

Redgirl82 wrote: »

....We moved into the house and lived in it.....

Principal private residence until such time as he moved out.