E
Elcato
Guest
Title edited to make it a key post
N
noelogy
Guest
property sale
Sorry about the 'Test' error. Iwish to sell some lands which were gifted to in 1991 and were valued at £20k.
I can realise Circa 75,000 euro for these and am a little unsure as to the tax implications. Thanks in advance.
Sorry about the 'Test' error. Iwish to sell some lands which were gifted to in 1991 and were valued at £20k.
I can realise Circa 75,000 euro for these and am a little unsure as to the tax implications. Thanks in advance.
C
CM
Guest
property sale
In general terms the following may apply:
- Capital acquisitions tax or gift tax on the original transfer of the lands to you in 1991
- Capital gains tax on any capital gain realised through the imminent sale allowing for indexation of the original land value.
However - there may be reliefs/exemptions depending on the specific circumstances - e.g. if the land was gifted to you from certain family members then there may be relief/exemption on the gift/capital acquisitions tax aspect and depending on the nature of the land (developemnt, farming?) there may be exemptions/relief on the CGT aspects.
Have a look at some or all of the following Revenue guides and post any relevant follow up queries. I'm sure somebody more knowledgable about taxation matters than me can probably be of more assistance!
- [broken link removed]
- [broken link removed]
- [broken link removed] and [broken link removed]
In general terms the following may apply:
- Capital acquisitions tax or gift tax on the original transfer of the lands to you in 1991
- Capital gains tax on any capital gain realised through the imminent sale allowing for indexation of the original land value.
However - there may be reliefs/exemptions depending on the specific circumstances - e.g. if the land was gifted to you from certain family members then there may be relief/exemption on the gift/capital acquisitions tax aspect and depending on the nature of the land (developemnt, farming?) there may be exemptions/relief on the CGT aspects.
Have a look at some or all of the following Revenue guides and post any relevant follow up queries. I'm sure somebody more knowledgable about taxation matters than me can probably be of more assistance!
- [broken link removed]
- [broken link removed]
- [broken link removed] and [broken link removed]
N
noelogy
Guest
property sale, captal gains tax
Thanks for your reply,
The issue of having the land gifted to me is causing me to wonder;a) can i calculate in this £20k in estimating the amount due in CGT and b) what family circunstances are you referring to?
The land was gifted from my mother.
Thanks for your reply,
The issue of having the land gifted to me is causing me to wonder;a) can i calculate in this £20k in estimating the amount due in CGT and b) what family circunstances are you referring to?
The land was gifted from my mother.
C
CM
Guest
property sale, captal gains tax
Sorry - I was being somewhat vague because I don't really know the detailed ins and outs of the relevant taxation rules and was trying more to point you in the right direction for further informatin (Revenue site etc.).
However in terms of Gift Tax you may be OK (i.e. exempt) in relation to the original gift of lands seeing that they were from your mother - the following (from [broken link removed])outlines the current rules in respect to "family" gifts:
<!--EZCODE ITALIC START--> <!--EZCODE BOLD START--> HOW MUCH OF A GIFT IS TAX FREE?<!--EZCODE BOLD END-->
There are three tax-free thresholds. There are different thresholds depending on the relationship between the person receiving the gift and the person making the gift.
<!--EZCODE BOLD START--> Group A:<!--EZCODE BOLD END--> £300,000. This applies to a child and to a grandchild under the age of 18 of the donor whose parent is dead.
<!--EZCODE BOLD START--> Group B:<!--EZCODE BOLD END--> £30,000. Included in this class are brothers, sisters, nephews and nieces.
<!--EZCODE BOLD START--> Group C:<!--EZCODE BOLD END--> £15,000. This applies to a donee who does not come under Class A or B.<!--EZCODE ITALIC END-->
So, assuming these general rules (whatever about the amounts) also applied in 1991 then you should be exempt from gift tax.
In relation to CGT I imagine that your liability would be calculated on the basis of the proceeds from the ultimate sale of the lands (c. €75K by your estimation) less original value of the land at the time you acquired it by way of a gift (IR£20K) adjusted for inflation (refer to the CGT and "indexation multipliers" guides mentioned above) less any expenses incurred in selling - assuming that you don't somehow qualify for some CGT exemption or relief otherwise.
Does this make sense to you (and to others!!)?
Sorry - I was being somewhat vague because I don't really know the detailed ins and outs of the relevant taxation rules and was trying more to point you in the right direction for further informatin (Revenue site etc.).
However in terms of Gift Tax you may be OK (i.e. exempt) in relation to the original gift of lands seeing that they were from your mother - the following (from [broken link removed])outlines the current rules in respect to "family" gifts:
<!--EZCODE ITALIC START--> <!--EZCODE BOLD START--> HOW MUCH OF A GIFT IS TAX FREE?<!--EZCODE BOLD END-->
There are three tax-free thresholds. There are different thresholds depending on the relationship between the person receiving the gift and the person making the gift.
<!--EZCODE BOLD START--> Group A:<!--EZCODE BOLD END--> £300,000. This applies to a child and to a grandchild under the age of 18 of the donor whose parent is dead.
<!--EZCODE BOLD START--> Group B:<!--EZCODE BOLD END--> £30,000. Included in this class are brothers, sisters, nephews and nieces.
<!--EZCODE BOLD START--> Group C:<!--EZCODE BOLD END--> £15,000. This applies to a donee who does not come under Class A or B.<!--EZCODE ITALIC END-->
So, assuming these general rules (whatever about the amounts) also applied in 1991 then you should be exempt from gift tax.
In relation to CGT I imagine that your liability would be calculated on the basis of the proceeds from the ultimate sale of the lands (c. €75K by your estimation) less original value of the land at the time you acquired it by way of a gift (IR£20K) adjusted for inflation (refer to the CGT and "indexation multipliers" guides mentioned above) less any expenses incurred in selling - assuming that you don't somehow qualify for some CGT exemption or relief otherwise.
Does this make sense to you (and to others!!)?
T
Tommy
Guest
Re: property sale
CM's reading of the situation is correct - but with one caveat. Indexation relief is not available on any "development value" or "hope value" that land may have had when acquired.
e.g. If the £20K value of your land property in 1991 represented the normal going rate for agricultural land in its locality at the time, you can claim indexation on its full £20K value from 1991 to date.
However, if part of that 1991 valuation included an element of expectation of future gain based on a likelihood of it being commercially developed sometime in the future, then you cannot claim indexation relief on this element.
I'll give you an example.
If the property is 20 acres of agricultural land in the West of Ireland, a valuation of £20,000 (1,000 an acre) in 1991 would hardly be likely to include any material development value over what a farmer at the time would be expected to pay for similar land for agri purposes only.
Indexation relief would be expected to apply to this scenario.
However, if the property is a 0.5 acre site at the edge of a busy town, and was valued at £20K in 1991, this would probably indicate that almost all its value at that time was based on an expectation that it would be developed in the future.
In this case, indexation would probably not apply.
The indexation rate for a disposal in 2002 of a property acquired in the 1990/91 tax year is 1.376 and it is 1.341 if the year of acquisition was 1991/92.
If you are able to claim full indexation relief, it will save you about €1,800 on your CGT bill. If in doubt, you should get professional advice from an accountant or tax consultant before finalising your CGT return, after the property is sold.
Finally, once the Revenue are happy that the £20K valuation 1991 was not wildly understated (which it obviously wasn't if its worth €75K now), and once you haven't received siginficant gifts/inheritances from your parents previously, you should have nothing to worry about Capital Acquisition Tax on receiving the land in 1991.
Tommy
www.mcgibney.com
CM's reading of the situation is correct - but with one caveat. Indexation relief is not available on any "development value" or "hope value" that land may have had when acquired.
e.g. If the £20K value of your land property in 1991 represented the normal going rate for agricultural land in its locality at the time, you can claim indexation on its full £20K value from 1991 to date.
However, if part of that 1991 valuation included an element of expectation of future gain based on a likelihood of it being commercially developed sometime in the future, then you cannot claim indexation relief on this element.
I'll give you an example.
If the property is 20 acres of agricultural land in the West of Ireland, a valuation of £20,000 (1,000 an acre) in 1991 would hardly be likely to include any material development value over what a farmer at the time would be expected to pay for similar land for agri purposes only.
Indexation relief would be expected to apply to this scenario.
However, if the property is a 0.5 acre site at the edge of a busy town, and was valued at £20K in 1991, this would probably indicate that almost all its value at that time was based on an expectation that it would be developed in the future.
In this case, indexation would probably not apply.
The indexation rate for a disposal in 2002 of a property acquired in the 1990/91 tax year is 1.376 and it is 1.341 if the year of acquisition was 1991/92.
If you are able to claim full indexation relief, it will save you about €1,800 on your CGT bill. If in doubt, you should get professional advice from an accountant or tax consultant before finalising your CGT return, after the property is sold.
Finally, once the Revenue are happy that the £20K valuation 1991 was not wildly understated (which it obviously wasn't if its worth €75K now), and once you haven't received siginficant gifts/inheritances from your parents previously, you should have nothing to worry about Capital Acquisition Tax on receiving the land in 1991.
Tommy
www.mcgibney.com
N
noelogy
Guest
property sale
Thanks folks, the clouds have parted!
Thanks folks, the clouds have parted!