Property Transfer to Child, CGT, CAT & "Same Event Relief"

T

TMA08

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My father recently decided to give me a property. I will be living permanently in this property.

We looked at transferring the property into my name and found out that his CGT liability would be huge and I would probably have to pay some CAT depending on the final valuation of the property.

We therefore decided to go the route of leaving the property in my fathers name and me living in the property which I will be doing anyway, thus avoiding CAT tax for me (after three years) and him avoiding CGT.

However, I wish to build an extension onto this property and therefore it would be handy if the property was in my name from a point of view of the planning application, getting a mortgage to raise funds for building etc...

I have heard about what is known as "Same Event Relief" which is desribed in the Finance Act 1985 and amended in the Finance Act 2006 (sec 63). I have read both these sections and to be honest I do not understand the implications of this relief to my situation due to the language used.

I will be seeking professional advice as soon as possible on this, but in the meantime can somebody explain what "Same Event Relief" in plain english and how it might effect the transfer of property situation described above?

See links to Finance Acts Below:
Relevant section of FA 1985:
http://www.irishstatutebook.ie/1985/en/act/pub/0010/sec0063.html#zza10y1985s63
Relevant section of FA 2006:
http://www.irishstatutebook.ie/2006/en/act/pub/0006/sec0119.html#id1141846063.41
 
I think this refers to the fact that in some circumstances your CAT liability can be offset by your father's CGT liability.

Thus if your CAT liability was 200,000 and your father's CGT was 175,000 then your liability is reduced to 200,000-175,000=25,000

As always, the devil is in the detail...
 
JPD, thanks for your reply. I think I understand now. I was hoping it would have been able to reduce the CGT liability for the party disposing of the property as opposed to reducing the CAT liability for myself. I think that due to the CAT allowances between parents and a child, the CAT liability would not of been a show stopper as it would be much less than the CGT due.

As I understand it now, the CGT is still payable in full on disposal and goes to offset the CAT payable on the same property. Would that be a correct understanding of the situation?
 
Hold on. There is relief from CGT & CAT for transfers from parent to child.

It's a one off relief and it's for transfers up to 520k.

Your professional advisor will confirm this.
 
KDA man said:
Hold on. There is relief from CGT & CAT for transfers from parent to child.

It's a one off relief and it's for transfers up to 520k.

Your professional advisor will confirm this.
Click to expand...

I think you might be referring to the transfer of a site by a parent to a child which is exempt from CGT and Stamp Duty but not CAT provided it is for less than 500k and not greater than an acre in size.
 
KDA - Are you referring to the CAT allowance when something is gifted to a child from a parent? If so I don't think this applies to the CGT liability of the parent / disponser, just to the CAT of the child / beneficiary.

I will certainly ask for professional help from my advisor on this one to see if it just the "site" rule that dazza21ie is referring to.
 
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