Transferring property deeds to family member Ireland. Tax implications

[theskull1]

Are there any legal/tax gurus out there that could help with this one

My brother in law wishes to transfer a house he has in Donegal into his brothers name. Both a resident in the north. No money will change hands in the transaction between them. Could anyone outline what the tax implications might be?

[Rav67]

I reckon he'll have to pay capital gains tax in the UK (assuming he is resident and domiciled in UK) on the increase in value from when he acquired the property (as its not his primcipal residence).  Even though no money's changing hamds- HMRC will be interested in the market value at the time of the transfer.  Annual gain exemption for capital gains tax is £10,100 and then there is an 18% flat rate applied to any "gain" above this amount.

Not sure about the position as regards tax south of the border.

[theskull1]

So if the value increased say 200,000 euros in 10 years, he's be exempt for 101,000 of it and then pay 18% on the remainder (18,000 euro rounded up).

Could anyone help out regarding the tax implications south of the border?




My gut feeling would be they might be better waiting a year or two for property prices to drop further before they do the transfer?

[Gaoth Dobhair Abu]

So if the value increased say 200,000 euros in 10 years, he's be exempt for 101,000 of it and then pay 18% on the remainder (18,000 euro rounded up).

Could anyone help out regarding the tax implications south of the border?




My gut feeling would be they might be better waiting a year or two for property prices to drop further before they do the transfer?

Feck, thats a bleak outlook!

[theskull1]

A bleak (yes) but fair assumption

[saffron sam2]

I reckon he'll have to pay capital gains tax in the UK (assuming he is resident and domiciled in UK) on the increase in value from when he acquired the property (as its not his primcipal residence).  Even though no money's changing hamds- HMRC will be interested in the market value at the time of the transfer.  Annual gain exemption for capital gains tax is £10,100 and then there is an 18% flat rate applied to any "gain" above this amount.

Not sure about the position as regards tax south of the border.

So if the value increased say 200,000 euros in 10 years, he's be exempt for 101,000 of it and then pay 18% on the remainder (18,000 euro rounded up).

Could anyone help out regarding the tax implications south of the border?

Need to check the figures there skull.

[Rav67]

I reckon he'll have to pay capital gains tax in the UK (assuming he is resident and domiciled in UK) on the increase in value from when he acquired the property (as its not his primcipal residence).  Even though no money's changing hamds- HMRC will be interested in the market value at the time of the transfer.  Annual gain exemption for capital gains tax is £10,100 and then there is an 18% flat rate applied to any "gain" above this amount.

Not sure about the position as regards tax south of the border.

So if the value increased say 200,000 euros in 10 years, he's be exempt for 101,000 of it and then pay 18% on the remainder (18,000 euro rounded up).

Could anyone help out regarding the tax implications south of the border?

Need to check the figures there skull.

Yeah, if it has increased by 200k he'll have to pay tax on the gain above the annual exemption of £10,100 so it will be 18% x £189,900 assuming he has made no other taxable disposals in the relevant tax year.

It may be that in this tax year he disposes of other assets - there may be a gain on these disposals so he will have to take this into consideration as well, or if there is a loss on any disposal (reduction in market value from purchase to disposal) these can be offset against any gains.

[magpie seanie]

Not 100% sure of this but think I can give some guidance on the ROI taxation situation. As the property is situated in the ROI the gift/transfer will be liable to Irish CAT at 25%. There is an exemption for transers between brothers/sisters of €43,400 so assuming there have been not transfers between them previously they could deduct this from the market value before applying 25% to get the CAT. There is a double taxation ageement between Ireland and the UK but I think this only applies to UK Inheritance Tax so don't think any CGT paid in UK would be deductible.

Also I think Stamp Duty will be payable in the ROI on the transfer.

Hope that helps.

[theskull1]

Oh ...stupidly thought the annual CGT exemption could be multiplied by the number of years he's had the property

So based on a 200000 increase in value

UK CGT will be = 34182 Euro

Irish GCT will be  = 39150 Euro

Plus Stamp Duty to be paid. From what I can see thats 7%. So assuming a market value of 300000 euros that would be 21000 euro


So based on these figures a total of 94332 Euro to be paid to the tax man just to hand over ownership.....holy fcuk 


And conveyencing fees still to be paid out on top of that

[Rois]

He won't have to pay CGT in both - will have to pay it in the south and declare on UK tax return but show how much tax was paid.  Can't claim difference in rates (ie 25% in south, 18% in UK).  Non-residents of ROI are charged CGT on certain classes of assets and land and buildings is one.

If the asset is in both bro in law and his wife's name, exemptions can be pooled.

Oh, and his bro will have to hope your bro in law doesn't die in the next seven years - it's a potentially exempt transfer to him and if he dies, the brother will need to pay inheritance tax.  That risk goes after the seven years.   

[magpie seanie]

He won't have to pay CGT in both - will have to pay it in the south and declare on UK tax return but show how much tax was paid.  Can't claim difference in rates (ie 25% in south, 18% in UK).  Non-residents of ROI are charged CGT on certain classes of assets and land and buildings is one.

If the asset is in both bro in law and his wife's name, exemptions can be pooled.

Oh, and his bro will have to hope your bro in law doesn't die in the next seven years - it's a potentially exempt transfer to him and if he dies, the brother will need to pay inheritance tax.  That risk goes after the seven years.    

Rois - Can you explain that to me? Am I right in what I said above that the guy getting the property will have to pay CAT in the ROI?

[Rois]

You are right indeed Seanie, it's payable in the south even by non-residents. He just won't have to pay a second time in the UK.

On inheritance tax, the property is a gift to the receiver and in the UK, there is a potential tax liability. If the person who made the gift dies within seven years of giving it, it becomes part of their estate, and whoever's left with the estate will have to pay inheritance tax on it (subject to exemptions etc). It's to prevent people signing over their houses or whatever just before they die to try to avoid inheritance tax. Yer man who receives the house will still have to pay capital gains tax on it when he sells it on unless he lives in it.

[Shamrock Shore]

I know the answer....but I can't be arsed answering until I see a few bob.

Or a prawn sandwich.

[magickingdom]

I know the answer....but I can't be arsed answering until I see a few bob.

Or a prawn sandwich.

normally i'm too lazy to answer these and let someone like ss answer, but even hes looking for money these days. anyway its a gift, no big deal legally, tax wise check the uk threashold rates (about 45k in roi brother to brother) excess at 25% in roi. the value of the transaction will have to be set at arms length (market value). get advice tho if the receiving brother wants to sell on in the future as the value set now will be his 'cost' for future capital gains tax if he sells