# Tax implications of gift of site from sibling



## Trabzon (22 Apr 2014)

Hi, and thanks in advance for your opinions.

It was always understood that my boyfriend and his siblings would choose a site from his fathers land to build a house on. Each sibling chose 'their' site, however only one was in a position to build, and is currently doing so, on 'his' site. 

Recently it transpires that the father has signed over all his land to this sibling, including all the siblings future sites. Both parents are alive and well. 

There is no issue with sibling. He will willingly transfer over the site to my boyfriend and the other siblings whenever they wish to build. But I believe that under CGT guidelines, the old arrangement would have been exempt from CGT due to the fact it was PPR, it was a parent-child transfer and also well under the threshold size-wise. 

Now that it would be a sibling-sibling transfer, what are the tax implications to be aware of? Would it come under CGT, Gift Tax, or CAT? Could anyone point me in the right direction of further information on the relevant taxes it may incur? And who would be liable for paying those taxes?


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## STEINER (22 Apr 2014)

The sibling to sibling tax free threshold for gifts is only €30,150, so, one wonders if much thought was given to the transfer of everything to one sibling.

http://www.revenue.ie/en/tax/cat/thresholds.html


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## mandelbrot (22 Apr 2014)

Depending on when the transfer from the parent to child 1 occurred the Gift Splitting rules could potentially be availed of to the other siblings' benefit in this case. I.e. if the child who received the land transfers part of it onto other siblings within 3 years it would be treated as a gift from parent to child...


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## Trabzon (22 Apr 2014)

STEINER said:


> The sibling to sibling tax free threshold for gifts is only €30,150, so, one wonders if much thought was given to the transfer of everything to one sibling.



We suspect very little thought was given. 



mandelbrot said:


> Depending on when the transfer from the parent to child 1 occurred the Gift Splitting rules could potentially be availed of to the other siblings' benefit in this case. I.e. if the child who received the land transfers part of it onto other siblings within 3 years it would be treated as a gift from parent to child...



The transfer was in the last few months as far as I know.


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## Joe_90 (22 Apr 2014)

So that deals with the CAT.

I wonder was Section 599 Retirement Relief claimed.  If so there may be a clawback on the son of the CGT payable by the parent.  Does Section 603A site to child supersede the clawback?


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## mandelbrot (23 Apr 2014)

Joe_90 said:


> So that deals with the CAT.
> 
> I wonder was Section 599 Retirement Relief claimed. If so there may be a clawback on the son of the CGT payable by the parent. Does Section 603A site to child supersede the clawback?


 
No, S.603A only applies to a disposal by parent to child - the operation of the gift splitting provision in the CAT legislation is simply a deeming provision for CAT purposes - for CGT purposes (and in legal terms) all of the land has passed from parent(s) to child 1.

If S.599 relief applied on the transfer from parent to child, a subsequent disposal(s) by that child of any of the land within the 6-year clawback period in S.599(4) may trigger a CGT liability.

The whole thing sounds very careless unfortunately


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## Bronte (23 Apr 2014)

Trabzon said:


> It was always *understood *
> 
> Recently *it transpires* that the father has signed over all his land to this sibling,
> 
> There is *no issue* with sibling. *He will willingly transfer* over the site to my boyfriend and the other siblings *whenever they wish to build*.


 
This is not good, at all.  I recommend that your boyfriend asks for the site to be transferred to him now, not when he wants to build.  Otherwise this will all end in tears.  It's easy to promise the sun moon and stars now but not follow through when the parents are dead, when landowning sibling marries and has kids and it's all forgotten what the deal was in the hazy mist of time.  Major family row than likely - this is the story of Irish farming familes down through the ages.   

By asking now for the transfer, and there's no reason why it shouldn't be done, then all is clear legally, and promises are actions, not fairytales.


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## Trabzon (23 Apr 2014)

mandelbrot said:


> No, S.603A only applies to a disposal by parent to child - the operation of the gift splitting provision in the CAT legislation is simply a deeming provision for CAT purposes - for CGT purposes (and in legal terms) all of the land has passed from parent(s) to child 1.
> 
> If S.599 relief applied on the transfer from parent to child, a subsequent disposal(s) by that child of any of the land within the 6-year clawback period in S.599(4) may trigger a CGT liability.
> 
> The whole thing sounds very careless unfortunately


Very careless it seems, though I know very little about tax matters. There are other siblings who, to my knowledge dont know about this transfer, we only found out because landowning sibling wanted to know if we were planning to put in for planning permission in the near future. 

So do I understand correctly that a new sibling-sibling transfer will likely trigger a CGT liability on the landowning sibling, and not us? And if he does this with several siblings it would apply too? And that CAT is non applicable in this case? 




Bronte said:


> This is not good, at all.  I recommend that your boyfriend asks for the site to be transferred to him now, not when he wants to build.  Otherwise this will all end in tears.  It's easy to promise the sun moon and stars now but not follow through when the parents are dead, when landowning sibling marries and has kids and it's all forgotten what the deal was in the hazy mist of time.  Major family row than likely - this is the story of Irish farming familes down through the ages.
> 
> By asking now for the transfer, and there's no reason why it shouldn't be done, then all is clear legally, and promises are actions, not fairytales.



I'm loath to push him on it - very easy for me to end up as the harpy that is stirring up the family if you know what I mean. I'd much rather gather information in laymans terms, give it to him and let him decide what he wants to do with the information, staying very much in the background. To be honest, I stopped considering the site 'ours' when a tranfer years ago didnt materialise. I decided I'd get my hopes up when the ink was dry on the deeds and not before.

Landowning sibling is married with children. So it belongs to him, his wife and their children will inherit it.



Joe_90 said:


> So that deals with the CAT.
> 
> I wonder was Section 599 Retirement Relief claimed.  If so there may be a clawback on the son of the CGT payable by the parent.  Does Section 603A site to child supersede the clawback?



I dont know if Section 599 RR was claimed, could you explain the implications if it were or not?


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## Joe_90 (23 Apr 2014)

If the recipient of the land disposes of it within 6 years then there is a clawback of the CGT that the parent would have paid.

In this example the parent would not have paid CGT because of S604A but I don't know will that apply as the actual disposal is between child A and child B.


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## Bronte (24 Apr 2014)

Trabzon said:


> I'm loath to push him on it - very easy for me to end up as the harpy that is stirring up the family if you know what I mean. I'd much rather gather information in laymans terms, give it to him and let him decide what he wants to do with the information, staying very much in the background. To be honest, I stopped considering the site 'ours' when a tranfer years ago didnt materialise. I decided I'd get my hopes up when the ink was dry on the deeds and not before.


 
Very sensible appraoch Trabzon, hope he appreciates you.  My OH had such an intangible site when I first met him, it's still in the ether.  Same story with my brother in law etc etc.


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## Joe_90 (26 Apr 2014)

The more I look at it, on the basis that the provisions of S598 do not supersede a S599 clawback I doubt S604A would supersede it so the CGT would be payable by the child A.

Thoughts?


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