Q&A

 Is there a tax risk in gifting house?

We are a married couple, both old-age pensioners, with four grown-up children. Three have their own houses, while the fourth resides with us.

He is mildly physically handicapped, and this may get worse with the passage of time, but our house, registered in the joint names of my wife and myself, is quite suitable for him, even in the longer term.

We have been told that we can gift the house to him in our lifetimes, or leave it to him in our wills, without inheritance tax liability, provided he lives in the house for at least six years afterwards and does not own another house. Is this correct?

Also, are there stamp duty implications when and if the house is transferred to him, although no money would change hands?

Our wills allow for our total estate to go to the surviving member, and on the death of the surviving member, our estate is divided equally between our four children. I would add in passing that the three with their own properties are quite agreeable to the above transfer if it saves on inheritance tax.

F. F., e-mail

There is nothing to preclude you passing on your home to your son without incurring any inheritance tax liability - as long as the house has been his main residence for the three years prior to him receiving ownership of it, he owns no other property and he remains in the property for six years following the transfer of ownership.

There is no stamp duty issue involved in such a transfer.

What you will need to do is complete Revenue Form CAT10 "Gift/Inheritance Tax Exemption For Dwelling House" and return it to the Revenue's capital taxes division in Dublin Castle along with the self-assessment return for inheritance or gift tax.

The relief also allows that should your son need long-term medical care in a hospital, nursing home or convalescent home, it would not be deemed to breach the six-year provision.

Equally, if the house is sold and replaced by another, his occupation of that property will also fulfil the requirements.

Gifting the property to your son during your lifetimes may be simpler to arrange but might have implications should you need to borrow against it subsequently. Arranging for it after you both pass on will require a specific provision in your will and this should be done through a solicitor.

Mortgage rates

The mortgage tables you carry in The Irish Times refer to a cost per thousand for loans at the various interest rates. Does this figure relate to a 20-year repayment term?

Mr C. MacD., e-mail

Although the prospect of a 20-year mortgage is now, for many, an unrealisable ambition given the price of houses and the weight of monthly repayments, it is still seen as the standard term. As such, the lending institutions use the 20-year term in assessing the cost per thousand on the rates they submit to Moneymate, which provides us with the data.

Naturally, people applying for a mortgage to any institution will be given the cost per thousand of repayments across a range of terms.

The figures that appear in Thursday's newspaper are purely for illustrative purposes. However, they are very useful for prospective homebuyers who can determine which lender provides best value in terms of the monthly cost of a given loan in uniform circumstances.

Credit cards

I recently endeavoured to avail of an offer from Ulster Bank to switch my existing credit card balances to a new Ulster Bank credit card account and pay zero per cent interest for the first nine months. I was looking to transfer balances from my own MBNA account and from my wife's store card account.

Initially, I was told that the offer was only for six months' free credit and had to take some considerable time to persuade the person at the other end of the phone of their own bank's offer. They sent a form, which I completed and returned.

The bank eventually reverted to me to say that they had approved my application but with a credit limit of 5,100. As this limit was below the balances I wished to transfer, the transfer could not take place.

No mention was made of this possibility prior to my application being made and approved. I did not see any mention of it on the form I filled or in any of the promotional literature. I have now wasted considerable time pursuing a banking option that does not live up to its promise. What, if anything, can I do?

Mr P.M., Dublin

You have fallen victim to the curse of the small print - that favourite refuge of the financial services industry. You've got to wonder about the confidence of these companies in the products they are selling when they feel the need to hide all the truly relevant material in small print .

To put it in context, the 17.9 per cent standard interest rate on Ulster Bank's Visa or MasterCard is higher than Bank of Ireland, Permanent TSB and National Irish Bank, so the only people interested in Ulster Bank's offer are those currently paying 18.9 per cent with AIB or, more likely, those with significant balances to transfer.

These people would be at least as interested in the fact that they may be approved for a card but not with a sufficient limit to transfer these balances as they are in the short-term breathing space granted by the nine-month interest-free period. Yet the zero per cent element is at the core of the bank's promotional literature while the restriction of transfers is most definitely not.

To be fair to Ulster Bank, it is not true that they make no mention of this condition as you allege. On the form you complete to apply for the card, it says: "Approval for a balance transfer is only available once the credit card application has been accepted. The amount of the balance transfer(s) that we process will depend on the allocated credit limit. Should your credit limit be insufficient to process all transfer requests, we will action them according to the order in which you have provided them to us."

They also repeat this cautionary note in the credit card section of their website.

That's hardly surprising as the bank would need to put some limit on the balances it agrees to transfer. Otherwise, it could be targeted by people with large debt and no realistic income to pay them off over time.

Having said that, the limit imposed by the bank in this case sounds unreasonably cautious given your circumstances and, as you say, it is of little use to you. You could always decide to allocate some of your balances to this card, close one or other of the accounts you and your wife now have and benefit from the interest-free period.

Your major bone of contention seems to be the waste of your time. Notwithstanding the fact that Ulster Bank does warn on the balance transfer issue in the small print, you feel you were strung along with what was at best a selective and incomplete promotional promise. I tend to agree.

This is exactly why so many people distrust the financial services sector, and the sooner it realises this, the sooner it can expect rising customer satisfaction ratings.

I can't comment on your experiences in initially securing the necessary form to apply for this card. However, as a general rule, if you experience such service difficulties on your first encounter with an organisation, you can expect to encounter the same - or worse - later on.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.