Tuesday 19 November 2019

Am I going to have to pay property tax?

Sinead Ryan

Sinead Ryan

My aunt left me a run-down property in her will last year.

It's a barely habitable bungalow which she believed I might like to renovate and use as a holiday home. I don't have the money for this now, but may do so in the future.

My question is: do I have to pay property tax on it? Nobody lives there, or will live there in its current state.

There are approximately 168,000 'empty' houses like yours across the country, not including holiday homes or vacant apartments and it is Revenue's job to assess which are liable for tax.

The definition is: "Any building or part of a building, which is used as, or is suitable for use as, a residence" and which was in ownership on May 1, 2013.

It doesn't come down to whether someone is living in it or not. Revenue may look for documentary evidence that it is not fit for habitation.

This might include photos and a surveyor's report if you are seeking an exemption, which, ironically, may cost you more than the tax.

For instance, if there is an electricity and water supply or an active phone line, this would deem it habitable.

If, on the other hand, it has no roof, then it's arguably so derelict that it doesn't qualify as a house.

There have been warnings not to make property deliberately uninhabitable, though, as this might affect any future planning permission you apply for.

The lowest property tax is €45 this year and €90 in 2014, based on a value of under €100,000.

You recently stated in an answer that a parent can gift a child up to €225,000 to help them up the property ladder without incurring a tax liability.

We'd like to help our son, but I understood the tax-free threshold only applied if I left it in my will and I can only gift €3,000 a year while alive?

There are two different allowances. One is an annual gifting limit anyone can receive; the other is a specific allowance under inheritance tax rules.

Barry Flanagan of www.taxback.com explains: "Anyone can receive amounts less than €3,000 tax free from anyone else, every year – ie there are no tax consequences to such gifts for either party.

For amounts greater than €3,000, the relationship between the giver and receiver is important. Parents giving a gift to a child fall into Group A, so the lifetime tax free threshold is €225,000 based on 2013 limits.

So, a parent who has never given a gift to a child of greater than €3,000 in any particular year can make a one-off donation of up to €225,000 tax free.

Previous gifts from prior years in excess of €3,000 are deducted from this lifetime threshold – ie if the child received €100,000 last year from either parent, then there would be only €125,000 of the allowance remaining".

So, feel free to gift your child during your lifetime but bear in mind he won't get additional tax free allowances after you pass on.

Irish Independent

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