Written Answers. - Tax Code.
Noel Ahern
Question:
88
Mr. N. Ahern
asked the
Minister for Finance
the stamp duties or other costs involved in transferring a family home among members of a family and particularly in the case of a householder adding her daughter's name to the deeds; if charges have been or are in the process of being increased; if legal work will be done by officials in his Department; the costs involved; if there is any advantage or necessity for a parent with only one child to do the transfer when alive or to allow probate against a will after death; and if he will make a statement on the matter.
[16027/00]
On the transfer of a family home among members of a family, particularly in the case of a householder adding her daughter's name to the deeds, the tax implications may be as follows.
Stamp duty may be payable on the value of the share of the property being transferred. The rate of stamp duty will depend on the market value of the share of the property as follows:
|
Value
|
Rate
|
|
Less than £60,000
|
Nil
|
|
£60,001 to £100,000
|
3%
|
|
£100,001 to £170,000
|
4%
|
|
£170,001 to £250,000
|
5%
|
|
£250,001 to £500,000
|
7%
|
|
Over £500,000
|
9%
|
However, transfers between relatives are at half the above rates. All parties must be blood relatives for this relief to apply.
In addition, the transfer of an asset is regarded as a disposal at market value for capital gains tax purposes regardless of what, if any, consideration is received in return. However, there is an exemption from CGT for the disposal of an individual's principal private residence or part thereof. Should the home, or part thereof, be transferred by way of an inheritance, then neither CGT nor stamp duty would apply.
The transfer of a home among members of a family is considered a gift or inheritance for capital acquisitions tax purposes. A tax-free threshold of £300,000 now applies on transfers from a parent to a child. CAT would only be levied on the value of the house, if any, in excess of this threshold. Where a child has received previous gifts or inheritances since 2 December 1988 from a parent, the value of these benefits must be taken into account for the purposes of determining the current, if any, liability to CAT. In addition, in the budget 2000, I introduced a family home relief for CAT purposes. This relief provides that the transfer of a home will be exempt from CAT provided that the home is the principal private residence of the recipient and he/she has been living in the home for the three years prior to the transfer and he/she does not have an interest in any other residential property. The recipient must own and reside in the house for six years after the transfer or the relief may be withdrawn. However, this six year condition will not apply to recipients over 55 years of age and in circumstances where the recipient is unable to comply with the residence requirement for reasons outside their control, for example, due to hospitalisation or work obligations. In addition, where the recipient sells the home within the six years and invests some or all of the proceeds in a replacement home and continuously occupies both homes for a total period of six out of the seven years commencing on the date of the transfer, the clawback of the relief will be limited to any proceeds not reinvested in the replacement home. Where a CAT liability arises in any event and CGT has been paid by the disponer on the same event, then that amount of CGT is allowed as a credit against the CAT liability.
There may be a probate tax liability if the transfer of the home takes place on death. Pro bate tax is generally charged at a rate of 2% on the net value of non-exempt assets left by a deceased, whether the assets pass under a will or intestacy. However estates with a taxable value of £40,000 or less are exempt from probate tax. Outstanding debts of the deceased, as well as funeral expenses, may be deducted as expenses of the estate in arriving at the taxable value. In addition, a dwelling house passing to a dependent child or dependent relative is exempt from probate tax provided the dependent child or relative had been residing in the dwelling house at the death of the deceased and had an income not exceeding the specified amount for the tax year 1999-2000 the specified amount was £4,848. To qualify as a dependent child, the child must have been under the age of 18 years, or if over 18 years, in full-time education. To qualify as a dependent relative, the person concerned must have been a relative of the deceased or of the wife or husband of the deceased, who was incapacitated by old age or infirmity from maintaining himself or herself or the widowed father or mother, whether or not he or she was so incapacitated of the deceased or of the wife or husband of the deceased.
There would normally be other costs involved in a transfer of property, for example, solicitors fees. I am not aware of increases in non-tax charges as this does not fall within my area of responsibility. My Department would have no role in performing any legal work in connection with the transfer of a family home.
