Tax implications of gift

The donation of nue-propriété of a parent’s home to a child appears at face value to be an attractive tax-efficient inheritance option as long as the donor lives 15 years. But what are the capital gains tax implications?

If after the death of the donor (parent), the child decides to sell the property but has never lived in it and it has never been their primary residence the sale is liable to capital gains tax on any increase in its value.

There is no gift/inheritance tax as long as the value of the share of the house given is beneath the allowance of €100,000. If the value is over this then gift/inheritance tax will be due at the prevailing rates in function of the value of the gift. There is a 15-year period after which the allowances are once again available.

The child will be liable to capital gains tax on their share of the property when this is subsequently sold. The tax is based on gain: the sale value less the value in the document making the donation (factoring in certain abatements).

So yes, if the increase in the property value between the donation and the eventual sale dates is high, the capital gain can be high.

You should also consider the legal costs involved in making a donation.

Bearing in mind, however, that potentially such a donation might enable the child to benefit from two sets of €100,000 gift/inheritance allowances from each parent twice over it could be worth the effort if you accept the costs and the child accepts the eventual capital gains tax liability.