Q. We have two children, our daughter, who lives at home with us, and our son, who has been living abroad for many years. We are lucky enough that we have good savings and want to gift our family home to our daughter now and help our son buy an apartment. We are worried that these gifts will cause headaches for us. Can you advise.
Dear Reader,
Before making any final decisions, it would be prudent for you to consider whether you have sufficient assets to meet you own needs. For example, you may want to retain your family home to assist in providing for nursing home care. You should discuss this matter as a family, but always ensure that your own needs are met.
Both children should closely consult with their tax advisors, and your son may also need advice from the country that he currently lives in.
Leaving or gifting your family home to your daughter should be relatively straightforward. She lives in Ireland and would be receiving a gift of Irish property, and therefore can inherit or be gifted a cash or assets to the value of €335,000 before Capital Acquisitions Tax (CAT) is payable.
If your home is worth €400,000, for example, then your child would be liable to pay around €21,500.00. If you wished to retain a right of residence in the home, the value of your home may be lower and therefore your child may have less CAT to pay.
As regards the child that lives abroad, a lot would depend on the tax laws of that country, whether you intend to gift cash or assets, and whether the property they intend to buy is in Ireland or in the country that they live in.
In some countries, gift taxes only apply where the person giving the gift is resident in the country. In other counties, including Ireland, CAT should only apply where the person receiving the gift is in the relevant country. In yet other countries, there is no such concept as a gift tax. The gift that you wish to give should be structured in a tax efficient way.
You should also note that some relief on double taxation, that is, if the nature of the gift is such that your son is charged for CAT here and gift tax abroad. There are different considerations if he were to live in the UK or the USA. Your tax advisor will be better able to advise.
Lastly, it is always sensible when making these important decisions that you consider making or updating your will, or whether you want to put an enduring power of attorney in place. You should discuss these matters with your solicitor.
