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April 2015

 

Question

I bought a house from my father last December to avail of no CGT if I keep the house for seven years. As my father was selling to a relative, I availed of the 75 per cent value. As I have already availed of my full free CAT entitlement to buy the house, am I now liable for CAT on the 25 per cent write down.

 

Answer

I am assuming from your question that your father gave you a gift of cash to purchase the house and that’s how you have exhausted your Class A threshold. I will base my answer on this assumption.

The Class A threshold is €225,000. You indicate that you have purchased the house at 75 per cent of the market value in December 2014. Please note that you will have a capital acquisitions tax liability arising on the total market value of the house, less any of your own funds that you put towards its purchase, less the €225,000 capital acquisitions tax threshold and the annual €3,000 tax-free exemption. I have also assumed you have received no previous gifts or inheritances from your father or mother. The capital acquisitions tax liability should be paid by October 31st, 2015.

I assume the stamp duty was correctly paid on the market value of the house and I also assume the market value was used to calculate your father’s capital gains tax liability, as he would be liable to capital gains tax on its transfer to you. Your capital acquisitions tax liability may be offset by your father’s capital gains tax liability as both tax heads arise in respect of the same event.

Donata Jureviciute is a tax consultant with Baker Tilly Ryan Glennon