# Purchase land from brother/planning



## Freddy (7 Jan 2012)

I am about to start the planning process for a house which we intend on using as permanent residency. The land was recently transferred from my father to my brother (farmers). We can have a site from my brother free of charge, but will have to pay his and our legal and tax fess. 

I have two questions:
1. Can we apply for planning before getting the land transferred/gifted from my brother to me hence avoiding paying the legals fees/ taxes etc. which we and my brother will incurr in case planning is not granted
2. How does one determine the value of the site?


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## kkelliher (7 Jan 2012)

All you need for planning is a letter from the owner of the site giving permission tobthe applicant to apply for planning permission. I dont know if this would effect any possible local needs requirements?

Land value can be ascertained by local auctioneers


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## Freddy (7 Jan 2012)

Thanks, can you explain what local needs requirements are?


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## Troy McClure (8 Jan 2012)

Freddy said:


> I am about to start the planning process for a house which we intend on using as permanent residency. The land was recently transferred from my father to my brother (farmers). We can have a site from my brother free of charge, but will have to pay his and our legal and tax fess.
> 
> I have two questions:
> 1. Can we apply for planning before getting the land transferred/gifted from my brother to me hence avoiding paying the legals fees/ taxes etc. which we and my brother will incurr in case planning is not granted
> 2. How does one determine the value of the site?


 
Just wondering why didn't your father give you the site directly instead of via your brother. The fact that your brother will give you a free site will not stop the fact he will get hit with a hefty capital gains tax bill that you will have to pay for him I assume. This could have been avoided.


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## mandelbrot (8 Jan 2012)

Troy McClure said:


> Just wondering why didn't your father give you the site directly instead of via your brother. The fact that your brother will give you a free site will not stop the fact he will get hit with a hefty capital gains tax bill that you will have to pay for him I assume. This could have been avoided.



OP says the land was recently transferred from father to brother, so it's unlikely there'll be further CGT.

If father and brother are both farmers, the land may have been transferred without a CGT liability arising (retirement relief, CAT relief).

Whereas if OP isn't a farmer there would possibly be liability to CGT and/or CAT, if father was to transfer land to him.


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## Freddy (8 Jan 2012)

both are farmers, so there was no CGT between them. But now as far as we know my brother will be liable for CGT in transfer from him to me (Troy- yes should have done all this before transfer from father to brother but unfortunately didnt, just wasnt on the horizon at the time). We will be covering this. Hoping that there will be no implications on father/brother transaction as a result of the next brother/sister transaction. Need to meet a tax person to figure out the costs. AT the moment we see our costs as being: 1. our CAT value of site less threshold 33208 at 30%; 2. Stamp Duty somewhere between 1 and 6% probably more like 6% as site value prob around 80000 but maybe we could get away with buting it under agricultural land (adverts for sites in area are 100000 plus); 3. Capital Gains Tax 30% of gain (no idea how this is established- again i guess its more of what was the value in father/son transfer Vs brother/sister transfer...agri/house use; and finally solicitor fees for both parties.


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## lowCO2design (8 Jan 2012)

Freedy, look at your local councils planning section &/or development plan for information on rural housing need. do get some advice before submitting on whether your application will impact on your siblings future chances of gaining PP


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## Mrs Vimes (8 Jan 2012)

Hi Freddy,

While it isn't a problem to apply for planning while your brother owns the land, he will then be gifting you a site which will presumably be worth a lot more than the agricultural land it is at the moment.

It would likely make more sense to let him gift you agricultural land and *then* you get planning permission and it becomes a site.

That way you pay stamp duty, CAT and the brother's CGT on a lower valuation.

Before you pay any taxes, legals, etc check with the planning department whether there is any hope of you getting planning in the first place - some areas have very restricitive rules and eg ownership of a different house or working in a different area could preclude you from getting planning.

Sybil


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## Freddy (9 Jan 2012)

thanks Mrs Vimes, would the check with the planning department take palce a pre planning meeting or just general query re my current circumstances


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## Troy McClure (9 Jan 2012)

Mrs Vimes said:


> Hi Freddy,
> 
> While it isn't a problem to apply for planning while your brother owns the land, he will then be gifting you a site which will presumably be worth a lot more than the agricultural land it is at the moment.
> 
> ...


 
Revenue are not idiots. Not only that, but you will do well to get an evaluator to go along with this. Agricultural land values are relevent when you are transfer a large acreage. When someone transfers an acre of land or probably less it's obvious it's not for farming. Especially so if it has road frontage. You can haggle on the evaluation amount with the person doing it but you will need a pure cowboy to go along with whats suggested above. Even if you find one the size of the plot would be an obvious red flag to revenue.
Your solicitor can probably calculate your brother liability but they are not tax accountants and it may not be accurate.


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## Bronte (10 Jan 2012)

Troy McClure said:


> . Agricultural land values are relevent when you are transfer a large acreage. When someone transfers an acre of land or probably less it's obvious it's not for farming. .


 
No matter what the size of it the value will be agricultural as it has no planning so it will have a lessor value. There is no guarantee of planning.  People can avoid taxes if they plan well and there is nothing wrong with that.  

OP I would certainly have a chat with the local planning office to see what they think, size of size in relation to septic tank, location and whether you can put an entrance on the road frontage and type of house would be important things to consider.  Also your brother must make sure he is not landlocked as a result of transferring site to you.


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## Vanilla (10 Jan 2012)

Was there a family 'understanding' between your father and your brother that although your father was to transfer the land to your brother, it was on the basis that if you needed or wanted a site your brother would have to make that available to you?

This is quite common in farming families and if this is the case you could make a case to revenue that the gift of the site is really from your father, which would in turn change the threshold. It is important that you think about this aspect before proceeding- if this is the case your solicitor can draw up a deed of trust and you can make a case to revenue which might eliminate your CAT liability. We did this quite recently in a file successfully and the child then also qualified under the following relief.


[broken link removed]


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## card789 (10 Jan 2012)

Vanilla I thought that relief was done away with with in 2010/2011 budget?


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## Vanilla (10 Jan 2012)

card789 said:


> Vanilla I thought that relief was done away with with in 2010/2011 budget?


 
Yes, sorry that was worded badly- I was just referring to a case we had but the CAT threshold would still apply in this case.


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## Troy McClure (13 Jan 2012)

Bronte said:


> No matter what the size of it the value will be agricultural as it has no planning so it will have a lessor value. There is no guarantee of planning. People can avoid taxes if they plan well and there is nothing wrong with that.
> 
> 
> > Thats a fine theory. Getting a reputable evaluator that doesn't have revenue red flag on them to agree with this is another thing. It may go through but I certainly would not bank on it.
> > This is one of the reasons attributed to buying plots with a price agreed 'pending' granting of planning permisson. If revenue think it's for a plot they will question the evaluation of you small piece of land, and the fact it may not currently have planning on it is irrelevent to this. Like I said they are not idiots.


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## mandelbrot (14 Jan 2012)

Troy McClure said:


> Thats a fine theory. Getting a reputable evaluator that doesn't have revenue red flag on them to agree with this is another thing. It may go through but I certainly would not bank on it.
> This is one of the reasons attributed to buying plots with a price agreed 'pending' granting of planning permisson. If revenue think it's for a plot they will question the evaluation of you small piece of land, and the fact it may not currently have planning on it is irrelevent to this. Like I said they are not idiots.



A sale of a site "pending planning" is a very different thing to what Bronte and others have suggested here. Such a contract is conditional on the planning permisison being obtained, and therefore the consideration / market value under the the contract reflects this condition.

If the transfer takes place between siblings (or as Vanilla has suggested, is deemed to take place from father to son), then the connected persons rules kick in for CGT i.e. a deemed transfer at market value. So, the question is, what value would the unzoned site fetch if it were put up for sale in the open market. There's no question that this value would be substantially less than the value of a site with planning permission, so it absolutely is relevant whether the transfer happens prior to or after planning permission is obtained.


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## Troy McClure (23 Jan 2012)

mandelbrot said:


> A sale of a site "pending planning" is a very different thing to what Bronte and others have suggested here. Such a contract is conditional on the planning permisison being obtained, and therefore the consideration / market value under the the contract reflects this condition.
> 
> If the transfer takes place between siblings (or as Vanilla has suggested, is deemed to take place from father to son), then the connected persons rules kick in for CGT i.e. a deemed transfer at market value. So, the question is, what value would the unzoned site fetch if it were put up for sale in the open market. There's no question that this value would be substantially less than the value of a site with planning permission, so it absolutely is relevant whether the transfer happens prior to or after planning permission is obtained.


 
You are misunderstanding me here. I will put it simply. Go to a local estate agent and tell them you want an evaluation of an acre of land that he will see on their visit, which they will have to do, is small and has road frontage. No planning et al.
Come back to me and tell me this evaluation is agricultural land prices. Revenue have red flaged evaluers who try to pass this off. It is not a black and white issue as some are suggesting here. It's not either or. Anyone I know in this line of work will not put agri values on a small plot. The value may be substantially less than a site with PP but it will be substandially more than agricultural land which changes hands in a volumn.


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## mandelbrot (24 Jan 2012)

Troy McClure said:


> You are misunderstanding me here. I will put it simply. Go to a local estate agent and tell them you want an evaluation of an acre of land that he will see on their visit, which they will have to do, is small and has road frontage. No planning et al.
> Come back to me and tell me this evaluation is agricultural land prices. Revenue have red flaged evaluers who try to pass this off. It is not a black and white issue as some are suggesting here. It's not either or. Anyone I know in this line of work will not put agri values on a small plot. The value may be substantially less than a site with PP but it will be substandially more than agricultural land which changes hands in a volumn.



I understand what you're saying Troy, and I'm telling you you're wrong, and so is any valuer who is silly enough to overvalue what is a piece of agri land until the day planning / zoning is obtained.

And trust me, I know a LOT more than you about Revenue's position on such matters...


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## Troy McClure (24 Jan 2012)

Perhaps you feel you do. I have first hand experince of this on a few occasions. And like I say go to an auctioneer and put your single acre road frontage evaluation to the test and we'll see whose wrong.


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## Troy McClure (24 Jan 2012)

mandelbrot said:


> And trust me, I know a LOT more than you about Revenue's position on such matters...


 
By the way, you have no idea who I am, so keep rhetoric bull for your mates in the pud who know you enough to suffer it.


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## mandelbrot (24 Jan 2012)

Troy McClure said:


> By the way, you have no idea who I am, so keep rhetoric bull for your mates in the pud who know you enough to suffer it.


 
That's a strange thing to say, since you have no idea who I am either, but your posting on this topic clearly shows you have less knowledge in this area than other posters (myself included - although I apologise for being a smartass). Your unfamiliarity with the jargon would appear to bear this out - the land will be valued by a valuer, not evaluated by an evaluer.

Your suggestion that Revenue "red flag" certain valuers in this type of transaction is also strange, and shows a lack of understanding about the whole process - as Revenue will only see who the valuer is, if and when they raise a query - so if the transaction is being looked at, it's being looked at, and it won't be because of who the valuer is.

I don't actually think we disagree substantially here at the end of the day. I am asserting that in a situation like this, the wisest thing (from a purely tax efficiency perspective) is to transfer the land prior to obtaining planning permission. The market value of a piece of unzoned land without PP, whose current use is agricultural, will be closer to it's agri value. Any valuation would have to factor in development *potential*, but that's all it is at that point, potential.

On the other hand, if the land has got full planning permission for a nice big 5 bedroom house at the time it is transferred, then it's development value has begun to crystallise, and therefore will be much greater than it was before planning was sought.


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## Troy McClure (24 Jan 2012)

mandelbrot said:


> The market value of a piece of unzoned land without PP, whose current use is agricultural, will be *closer *to it's agri value. Any valuation would have to factor in development *potential*, but that's all it is at that point, potential.
> .


 
Firstly this is the same point to which you disagreed with earlier, and is what I am trying to say to OP. Now your agreeing with me. Like I said to OP it's not, either, or. If the farmer next door sells 20 acres for 10k an acre it's wrong to say that your single acre is thus worth 10k. 

Secondly I have first hand experience of an estate agent who attracted attention from revenue more than once when their letterhead was seen attached, as they were using their position to help someone avoid tax previously and revenue were keeping an eye on them. This happened.

Thirdly, I have dyslexia and when you write things and even reread them poor spelling and repeating words is an everyday difficult occurance. 
But dont let your own ignorance stop you from branding me stupid.


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## mandelbrot (24 Jan 2012)

...


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## mandelbrot (24 Jan 2012)

Mrs Vimes said:


> While it isn't a problem to apply for planning while your brother owns the land, he will then be gifting you a site which will presumably be worth a lot more than the agricultural land it is at the moment.
> 
> It would likely make more sense to let him gift you agricultural land and then you get planning permission and it becomes a site.
> 
> That way you pay stamp duty, CAT and the brother's CGT on a lower valuation.


 


Troy McClure said:


> *Agricultural land values are relevent when you are transfer a large acreage. When someone transfers an acre of land or probably less it's obvious it's not for farming. Especially so if it has road frontage.*


 
It appears from this that you believe that agri value is *only* relevant where the transfer is of a suitably large plot. The simple fact is that if you transfer me an acre with road frontage, I can easily say that my intention at the time you transferred it to me, was to hobby farm it, maybe fatten a few cattle on it, or keep a few horses on it for hacking around on. This couldn't be easily disproven. (Arguably, not even if I decided shortly afterwards to apply for planning permission on it.) This is why market value can / will be applied - a value that incorporates the current use value plus the value of potential development.



Troy McClure said:


> This is one of the reasons attributed to buying plots with a price agreed 'pending' granting of planning permisson. If revenue think it's for a plot they will question the evaluation of you small piece of land, and *the fact it may not currently have planning on it is irrelevent to this.*


 



mandelbrot said:


> *the question is, what value would the unzoned site fetch if it were put up for sale in the open market. There's no question that this value would be substantially less than the value of a site with planning permission, so it absolutely is relevant whether the transfer happens prior to or after planning permission is obtained.*


 


Troy McClure said:


> You are misunderstanding me here. I will put it simply. Go to a local estate agent and tell them you want an evaluation of an acre of land that he will see on their visit, which they will have to do, is small and has road frontage. No planning et al.
> *Come back to me and tell me this evaluation is agricultural land prices.* Revenue have red flaged evaluers who try to pass this off. It is not a black and white issue as some are suggesting here. It's not either or. Anyone I know in this line of work will not put agri values on a small plot. The value may be substantially less than a site with PP but it will be substandially more than agricultural land which changes hands in a volumn.


 
The above is, as far as I can see, the nub of our debate here - you appear to believe that myself and others were suggesting that a transfer now while the land has no planning permission, would be at agri value. I can't speak for anyone else, but that was never my belief, as you will see from the emboldened part of my previous posts quoted above.

When valuing the land a valuer should incorporate into his valuation the additional value from the development potential. But this doesn't mean that the site suddenly assumes the same value as it would have if it had already been zoned / had PP granted. Given that this potential is dependent on uncertain future events, the uncertainty will require a substantial discount on the value the site would have if it were already zoned.



Troy McClure said:


> Firstly this is the same point to which you disagreed with earlier, and is what I am trying to say to OP. Now your agreeing with me. Like I said to OP it's not, either, or. If the farmer next door sells 20 acres for 10k an acre it's wrong to say that your single acre is thus worth 10k.


 As per the above I'm not disagreeing - I'm saying what I've said all along - the value before you obtain planning will be less than the value afterwards. What I disagreed with, was the impression that the agri value is irrelevant just because the parcel being sold is suitable as a site.



Troy McClure said:


> I have first hand experience of an estate agent who attracted attention from revenue more than once when their letterhead was seen attached, as they were using their position to help someone avoid tax previously and revenue were keeping an eye on them. This happened.


 That's in no way surprising - but again I would suggest that you're putting the cart before the horse here. You only have to furnish the actual valuations if / when Revenue ask for them. If they ask for them it's because they already are unhappy with the figures used (an exception may be if a CG50 is being sought). It doesn't really matter therefore whether the valuer is on their naughty list or not, because they're likely to dispute the figures anyway.



Troy McClure said:


> Thirdly, I have dyslexia and when you write things and even reread them poor spelling and repeating words is an everyday difficult occurance.
> But dont let your own ignorance stop you from branding me stupid.


 Talk about a chip on your shoulder - unless you're a tax / property professional then I would stand over my assertion that myself and other posters here have more experience and expertise in this area than you, nowhere did I suggest stupidity on your part, I merely suggested that your language suggested less familiarity than other posters.


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## Freddy (24 Jan 2012)

thanks Troy and Mandelbrot for you input. I think ye have both identified a key point of my query- i.e. how much the land will be valued for. I will get it valued to see, but even if it was valued more than the agri value, it would still be cheaper than going out buying a site in our area with PP. We are currently checking out whether my brother or father may become liable for tax as the transaction on farm transfer happened < 2 years ago, and now brother is essentially transferring ~ acre to me which looks like a break in his condition of farm inheritance. We would obviously be paying for this tax liability so would be interested to know your opinions on this, i.e. would revenue look back at father/brother transaction?


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## Troy McClure (25 Jan 2012)

Freddy said:


> thanks Troy and Mandelbrot for you input. I think ye have both identified a key point of my query- i.e. how much the land will be valued for. I will get it valued to see, but even if it was valued more than the agri value, it would still be cheaper than going out buying a site in our area with PP. We are currently checking out whether my brother or father may become liable for tax as the transaction on farm transfer happened < 2 years ago, and now brother is essentially transferring ~ acre to me which looks like a break in his condition of farm inheritance. We would obviously be paying for this tax liability so would be interested to know your opinions on this, i.e. would revenue look back at father/brother transaction?


 
Freddy, 
you need to get a solicitor to look at it. Like I said at the start, you'll need to have it valued and this will be higher than agri values and lower than a site with PP, just to be clear on that if done by a reputable agent. So allowing that it's somewhere in between, there will be a CGT bill for you brother. This will be based on the value of the plot, and the fact no money changed hands is irrevelent I am afraid. If you do get an answer you like from someone on what the previous transfer means now, from someone in revenue, make sure you get their name and get it in writing. 
I went through this exact process that your going through but the transfer from my father to my brother was done years before, but I guess once it's done it's done I paid his CGT bill on the transfer at the time plus our stamp duty. Stamp duty was small. I would also suggest you have an accountant look at the tax calculation. I have an accountant working for me so it didn't cost me, but if you know someone it may halp to keep the bill down if it's done correctly. But this is not a big deal and I wouldn't spend on it just to save small as a solicitor will have it close enough.
There may have been changes in the Gov budgets that may have affected this area, so get proper advice as there are alot of student types and people with little actual experience on aam etc giving advice as if it were godspell. Remember also, any expenses to do with the transaction are tax deductables. If you get a valuation done made sure invoice is in your brothers name for example, as it's 'his' CGT bill your deducting from.
Good luck.


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## mandelbrot (25 Jan 2012)

Troy McClure said:


> If you do get an answer you like from someone on what the previous transfer means now, from someone in revenue, make sure you get their name and get it in writing.


That won't make much difference if a problem arises further down the line (except to reduce or eliminate any penalties) - Revenue won't be bound by a mistake or erroneous advice from one member of staff. If it transpires tax is due it'll still be collected.



Troy McClure said:


> I went through this exact process that your going through but the transfer from my father to my brother was done years before, but I guess once it's done it's done


 Except that as the OP is already aware, there is a substantial difference depending on how long it is since the original transfer. Vanilla gave some good advice in this regard earlier. 



Troy McClure said:


> I would also suggest you have an accountant look at the tax calculation. I have an accountant working for me so it didn't cost me, but if you know someone it may halp to keep the bill down if it's done correctly. But this is not a big deal and I wouldn't spend on it just to save small as a solicitor will have it close enough.
> There may have been changes in the Gov budgets that may have affected this area, so get proper advice


Well which is it, are you advising him to pay for good professional tax advice, which on a property transaction will always pay for itself, or are you suggesting he DIY it, or get a solicitor who may not have a breeze about the tax aspects, to do it.
If it's not too much like "rhetoric bull", I'll mention just one instance I've seen in the last 18 months, where a farmer disposed of his farm, left the CGT filing up to his solicitor, and ended up being audited and owing an additional €100k - €70k in tax and €30k in interest / penalty. I'd imagine if he could do it over, he'd gladly pay a decent accountant a few hundred quid to have not made a hash of it...



Troy McClure said:


> there are alot of student types and people with little actual experience on aam etc giving advice as if it were godspell.


 Agreed, a little knowledge can be a dangerous thing...


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## 44brendan (25 Jan 2012)

I think the exact quote is "A little learning can be a dangerous thing"


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## mandelbrot (25 Jan 2012)

There's a quote?!?! I'm obviously not learned enough...


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## gracehealy (3 May 2012)

*New question related to this post*

Hi there, I was searching through old posts rather than start a new one and thought the people on this post may have some of the answers I'm looking for. Do you know if I can apply for planning permission in my name to build a house on a site (still) owned by my father? My intention is (for personal reasons) not to have the site transferred from my parents to me for the forseeable future. I just want to know if the fact the site is and will continue to be, in my Dad's name will hinder me from getting planning permission on the site? There will be no mortgage so that's not a consideration.


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## lowCO2design (3 May 2012)

you can apply from planning without it in your ownership, you just need a letter from the owner(father) stating that they give us permission to apply..

have you considered that this land is probably currently worth circa 10g and once planning is granted that value increases to maybe 50-100g, this may be worth considering and its why family lands ownership is generally dealt with prior to Planning


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