Transfer of a 2 acre site from parent to child

T

the.man

Guest
My father has agreed to transfer 2 acres to me for a self build. I have not received any gifts from my parents prior to this.

We have decided to transfer the land before I seek planning permission on it which I will do once transferred.

I have had it valued by an auctioneer at 60K as agricultural land.

I have been told by a tax consultant that my father have does not have to pay Capital Gains Tax as he is over 55 and has had the land for purely agricultural land for over 20 years. But my solicitor says that I should transfer the 1 acre plus the size of the house first and then transfer the land behind the house at a later stage as it would not be worth as much having no road frontage as my father would be liable for as much capital capital gains tax.

Any advice would be welcome
Thanks
 
Hello

You should be aware that there is an exemption from Capital Gains Tax where a parent transfers land , up to a value of 254,000 to his or her child to enable that child to build a principal private residence.

If the child subsequently disposes of the land without building the house OR has built the house but did not live there for at least three years then the CGT that would have previously accrued to the parent will accrue to the child.

The "gift" may be taxable in the hands of the child but in your specific circumstances it would seem that the "gift" will be below the threshold meaning zero tax will be payable.

I don't see any merit in transferring the land in two chunks.

Best wishes, I hope it works out
 
Hello

You should be aware that there is an exemption from Capital Gains Tax where a parent transfers land , up to a value of 254,000 to his or her child to enable that child to build a principal private residence.

If the child subsequently disposes of the land without building the house OR has built the house but did not live there for at least three years then the CGT that would have previously accrued to the parent will accrue to the child.

The "gift" may be taxable in the hands of the child but in your specific circumstances it would seem that the "gift" will be below the threshold meaning zero tax will be payable.

I don't see any merit in transferring the land in two chunks.

Best wishes, I hope it works out
 
From the revenue website:

[broken link removed]

"The transfer of a site from a parent to child is exempt from stamp duty where the site transfer is for the purpose of constructing a house which will be the child’s main residence. The value of the site must not exceed €254,000 and the area must be less than .4047 hectare (1 acre) exclusive of the area occupied by the house itself."

This suggests that if you receive the entire 2 acre site now you would have to pay stamp duty and possibly your father may also have to pay CGT.

So taking only 1 acre at this stage will not cost either of you anything. Taking another acre at a later stage will then be a transfer of agricultural land from your father to you and will have tax implications.

It looks like your tax adviser has crunched the numbers and transferring the 2 acres in two stages minimises the amount of money you both will have to hand over to Revenue.
 
the.man said:
I have been told by a tax consultant that my father have does not have to pay Capital Gains Tax as he is over 55 and has had the land for purely agricultural land for over 20 years. But my solicitor says that I should transfer the 1 acre plus the size of the house first and then transfer the land behind the house at a later stage as it would not be worth as much having no road frontage as my father would be liable for as much capital capital gains tax.

Any advice would be welcome
Thanks
Click to expand...

There's a couple of things here.

Firstly, there's the relief from CGT (and CAT and stamp duty) if your father transfers a site consisting of the house and no more than one acre. Take that now and there's no tax.

The second part relates to retirement relief. If your father disposes of land, he is subject to CGT (unless it's particularly exempt, as in the case of the site). However, if he is over 55 and the land is farming land, owned and farmed by him for the last 10 years, he can transfer this to you without any CGT. However, if you dispose of this land within 6 years, YOU will be obliged to pay the CGT that he avoided.

On the second transfer, you might be subject to CAT, but your group threshold should cover that. So, the only tax payable on the second transfer of land would be stamp duty.
 
Fully agree with Nige

The only difference between transferring one acre or two acres is that you will need to pay stamp duty on the second acre.

If the second acre has no road frontage and is therefore only good for agricultural land it's unlikely to have a value exceeding 20,000,possibly less. Stamp duty rates between relatives are half the normal rates so this is definitely not a material cost.

Retirement relief for your father for CGT purposes is restricted to 500,000.
 
APHRODITE said:
Retirement relief for your father for CGT purposes is restricted to 500,000.
Click to expand...

the limit has been increased to €750,000 and there is no limit when transferring business assets to a child (though there is the clawback if the child disposes of the asset within 6 years).
 
Re: Transfer of a 2 acre site from parent to child

Hi

I have a similar situation to above where as the site is over 1 acre but under 2. I was wondering if it would cost less stamp duty if just the one acre was transferred to me and the remainder to be transferred to my daughter. Would this incur any costs.

Thanks for your help
 
the boss said:
Re: Transfer of a 2 acre site from parent to child

Hi

I have a similar situation to above where as the site is over 1 acre but under 2. I was wondering if it would cost less stamp duty if just the one acre was transferred to me and the remainder to be transferred to my daughter. Would this incur any costs.

Thanks for your help
Click to expand...

The 1 acre you would get should be tax free (CAT, CGT & Stamp Duty) but there could be CAT, CGT and Stamp Duty on the transfer to your daughter.
 
Do you think that the CAT, CGT and stamp duty would apply even if my father gifted the remainder directly to my daughter rather than me. Does that fact that she is under 18 have any implications.

Thanks
 
the boss said:
Do you think that the CAT, CGT and stamp duty would apply even if my father gifted the remainder directly to my daughter rather than me. Does that fact that she is under 18 have any implications.

Thanks
Click to expand...

I presumed that the remainder was gifted directly to your daughter so CAT, CGT & Stamp Duty could apply (there are anti-avoidance measures if the gift was to you and on to your daughter). The fact she is under 18 doesn't change the tax position.
 
Thanks for the advice dazza21ie and Vanilla. It's much appreciated and has helped a lot.
 
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