Eoin McGee: Personal finance Q&A

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Today with David McCullagh 14 min 2 speakers 6 chapters transcribed 12 days ago

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What is the purpose of this personal finance Q&A episode?

David McCullagh 0:00

I'm joined now in studio by financial planner Owen McGee. Morning, Owen. Good morning. Thanks for having me in. Yeah, if you have a question for Owen, uh you we'll try and get to as many as we can. You can WhatsApp us on O eight seven O thirty two thirty two thirty two. Text five one five five one or email today DMC at RTE dot IE. I want to uh get our first caller, Joan is on the line. Joan, you have a question about transferring ownership of a property.

Joan 0:24

Uh yes, good morning. Um I have a second property which was rented, but I am just wondering if I want to transfer that property to my daughter, what's the most tax efficient way of doing that?

Owen McGee 0:35

The most tax efficient way, Joan, and thanks for bringing in. The most tax efficient way is actually wait until you're dead, unfortunately. Um I hate I hate to give you that one, but if you do it now, there's two things that can happen. First of all, what will happen is is even if your daughter doesn't pay you or let's say you give her a reduced cost on it, right? You're going to be taxed at the market value. So it'll be seen as a disposal by you. So let's just make up the numbers. We don't need to know your exact numbers. If it's worth 400,000 euros. She might be able to get it at the 400,000. That 400,000 is gifted to you and she'll use up her threshold. If she hasn't used it up, it'll also be no tax implications for you.

Owen McGee 1:09

But if you bought it for 300 and you give it to her and if the market value is 400, you're getting taxed on 100,000 euros there. So it it is expensive. Now, if you wait until you're actually gone and she doesn't inherit any other property on the day that she inherits the house from you. And she doesn't inherit the family home that you're in at the moment and she doesn't have any own uh any of her own property at the time, it won't come out of her allowance and because you're dead you won't pay capital gains tax on it. So it's it's something that needs to be considered because there is a difference between passing something when you're alive and passing something when you're gone.

David McCullagh 1:43

So maybe don't transfer ownership just yet.

How can I transfer a rental property to my daughter in the most tax‑efficient way?

Owen McGee 1:46

Don't transfer and I don't know how that works from a life perspective, whether that suits her life, your life, and whatever else it is. But th what I would say is is there there is certainly something worth sitting down with a tax planner on and talking to them and saying what's the right way of doing this? Does that make sense to you, Joan?

Joan 2:01

It does, yeah, yeah. So I what basically what you're saying, if I dispose of it now I'd have to pay capital gains tax on on what whatever I gained.

Owen McGee 2:08

Exactly. Yeah. Yeah, whatever you gained. She may avoid the tax, but she'll it's more likely she's gonna avoid the tax on your death than she would if you give it to her during your lifetime.

Joan 2:17

Yeah, but the the problem is we do have a a primary uh residence as well. So Yeah. And what you what

Owen McGee 2:22

you could do there is is you could you could get good some legal advice to the primary residents disposed of in a different way that she doesn't inherit it on the day. And we we are getting complicated. I'm and my I don't know if there's other siblings or what way it is, but I would certainly be sitting down with there's too much at play here to to make a bad move on this and get hit with a tax bill today, and you could probably avoid the tax bill later on if it's structured properly.

David McCullagh 2:43

Okay, Joe?

Joan 2:45

Thank you very much. Thanks very much for

David McCullagh 2:46

calling in, Joan. Now we have Mary on the line who has a question about putting money into a discretionary trust fund. Morning, Mary.

Mary 2:55

Hi, David. Thanks very much. Um Owen, um I'm a parent of an adult um child with special needs and and getting on an aid. So we have written our will and we've set up a discretionary trust. We've also done the um assisted decision making agreement with the DSS. Yeah. So we're trying to do everything we possibly can for um future proofing and um as you know yourself what the situation is you don't know where the person's going to live. So um I just wanted to know that um a relative gave some small sum of five thousand.