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Transferring Ownership of Your Home to a Family Member

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The transfer of property ownership to a family member, while generally simpler than buying or selling, still requires careful handling to ensure everything is correctly executed. The conveyancing team here at McCarthy + Co provides expert legal assistance to families requiring help with this process, be it adding a new partner to your property’s title documentation or a full transfer of ownership to or another member of the family. Arrange a consultation with us today to discuss how we can help you with the legal aspects of transferring ownership.

Below we have answered some of the most common questions we are asked in relation to this topic.

What is a transfer of home ownership?

Transferring home ownership is a process where ownership of a property, either in part or whole, is legally passed from one individual to another typically as a gift where no money changes hands in a transaction known as a “Voluntary Transfer”. Occasionally a transfer of ownership to a family member can take place involving some exchange of money, typically a sum that is significantly below the market value of the property.

The transfer process encompasses several key steps:

  • Legal Representation– It is a legal requirement that both parties engage separate solicitors. This ensures the transferor is freely gifting the property without undue influence or pressure.
  • Property valuation – A valuation will be necessary to confirm the current market value of the property. Even if the property is being gifted, the value of the property at the time of the gift will determine what taxes will be payable.
  • Deed of Transfer– This legal document formalises the transfer. Both the transferor and transferee should seek advice on any tax implications arising from the transfer.
  • Map– If only a portion of the property is being transferred, the transferor’s solicitor will require a Land Registry compliant map to clearly define the area being transferred.
  • Registration – All relevant documents will be sent for registration to the Land Registry or Registry of Deeds, depending on the title of the property changing hands. This ensures the new ownership is formally recorded.

Once completed, a Voluntary Transfer is irrevocable unless there are unusual circumstances where the transaction should not have been permitted in the first place, such as pending bankruptcy or some form of fraud having been committed by a title holder.

What are the tax implications of transferring home ownership to a family member?

When property passes between parties by way of a gift there are three taxes that need to be considered, Stamp Duty, Capital Gains Tax (CGT) and Capital Acquisitions Tax (CAT).

Stamp duty is a tax payable on the deed which transfers the interest from one party to another.  Stamp duty on residential property under €1M is 1% and stamp duty on non-residential property is 7.5%.  Stamp duty will be payable on the current market value of the property even if no payment is being received by the transferor.

Capital Gains Tax (CGT) might be due from the transferor when the property’s value has risen since its acquisition. This holds true even if the transferor does not receive payment for the property. The Revenue regards a voluntary transfer in the same way as a sale, and under certain circumstances, the transferor may face a significant CGT liability after transferring a property even if they have not received any payment. This aspect of CGT is often not well understood and can unexpectedly affect individuals contemplating property gifting.

Capital Acquisitions Tax (CAT) is a “gift or inheritance tax” and may be payable by the recipient depending on their circumstances and their relationship to the transferor.

At the time of writing, parents can gift property with a value of up to €335,000 tax-free to a child.  This figure is known as the “tax-free threshold” and is reduced whenever a gift in the same threshold is received.  Once the tax-free threshold is exhausted any future gifts will attract a CAT liability at a rate of 33% of the value of the gift. For gifts from grandparents to grandchildren, the tax-free threshold is significantly lower, at €32,500. Gifts or inheritances between spouses or civil partners are exempt from Gift and Inheritance Tax.

The above information is intended to briefly inform on the taxes that may arise in relation to a voluntary transfer of property, the precise details will vary case by case.  It’s important to seek professional advice to understand the legal and tax ramifications of transferring property ownership.

What are the risks of transferring ownership of your home to a family member?

Gifting property can involve significant risks, particularly if not researched and planned property.  Taking good quality legal and tax advice is essential.

Transferring your property means losing legal ownership and control, which can lead to unforeseen issues like eviction, unwanted alterations, or occupancy by others. Family disputes can exacerbate these problems.

There are measures that can be put in place to reduce some of these risks, for example, it is possible to reserve rights to continue to reside in the property you have gifted to a family member. However, these measures do not always avoid difficulty between parties, and you should think carefully before you dispose of any property. It is not something that can be undone later without the full agreement of the parties involved. Even if the parties agree to reverse the transaction, taxes will apply on the reversion, and these may be more significant as the tax-free thresholds may differ where the transfer is now going in the opposite direction.

Finally, you should carefully consider the recipient’s financial & marital situation. If they struggle financially the property may be at risk of being seized to settle their debts. If they are dealing with relationship issues, the property could become entangled in a separation or divorce settlement. For all these reasons are more, it is essential to have a thorough discussion with the recipient about finances before proceeding with the transfer.

Would you like to talk to a solicitor about transferring ownership of your property?

If you have any further questions in relation to the transfer of ownership of your home to a family member, our conveyancing team would be more than happy to assist you. Call us on 1800 816 570 and we will connect you to a professional within our team. You can also email info@mccarthy.ie and we will get back to you as soon as we can.

Joseph McCarthy

Joseph has been an integral member of our team since 2013, bringing a unique blend of expertise and dedication to his role. His specialisation lies in private client work, with a focus on conveyancing and probate. In simpler terms, Joseph’s role involves assisting homeowners and prospective homeowners in their property buying or selling journeys. He also offers support in managing the affairs of deceased individuals, guiding next of kin and executors through every stage of the process from the moment of a person’s death. Additionally, Joseph provides assistance in will drafting, ensuring his clients have peace of mind for the future. Joseph also regularly assists clients in creating Enduring Powers of Attorney and advises clients and their families on how to manage circumstances where a person’s mental capacities may be impaired.

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