Q – My 31 year old son is coming to live with me – I am a widow aged 66 – and is spending about € 80,000 on converting part of the house for his own space. I do not want to disinherit my other son and daughter but if I bequeath the house, then worth € 380,000, to my son and he lives with me for at least 3 years, the home is then out of the tax net and he gets it tax free. Is this right ? He has no other property. How do I sort out my other son and daughter ? Sheila – Portarlington Co Laois
A – Thanks Shelia the current Capital Acquisition Tax threshold is € 335,000 from parent to child though this may increase to € 400,000 in next month’s Budget, so as you say, there is no tax liability on the inheritance ( over this amount, the tax is 33% ) but as the property is not being sold, there will be stamp duty payable at 1% on the conveyancing plus legal fees. Your son will have to stay in the home for another 6 years after your passing for him to take the home out of the inheritance assets net. Any other assets you have then fall into the CAT threshold structure. Assuming you have no other assets and there is no mortgage and allowing for the € 80K your son will be funding to upgrade the house, it means your other son and daughter will miss out on € 100K each. You may have other assets that you could give your children or your son could give them € 32,500 tax free ( sibling to sibling ) each but they are still shy of € 67,500 of inheritance if divided equally. Better for your son to raise a mortgage of € 200,000 at that time if he wants to keep the house but he’d need an annual income then of € 50,000 – as a first time borrower eligible up to 4 times annual income. Whatever happens don’t let the situation break up the family !