Better to recieve land as gift or inheritance?

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chippengael

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My mum is the owner of an 80 acre non-residential property which she would like me to have. I would like to restore some old houses on the land (ruins really) but I'm sure it would be better for the land to be in my name to do this as I'll have to borrow quite a bit.

My question is: is it more tax efficient to recieve the land as a gift or inheritance?

My mum is 73, so she could avail of 100% CGT relief on the transfer- true?

Also, the first €466,725 is CAT free - true?

Am I liable for stamp duty? How much?

What other taxes are involved?

Thanks
 
chippengael said:
My mum is 73, so she could avail of 100% CGT relief on the transfer- true?
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I'm not sure what exemption you are referring to-are you suggesting she is exempt from CGT? I'm not sure that this is the case.

I'm assuming that she can't qualify for retirement relief.

There is no CGT payable if transfer is made on death (inheritance) as opposed to a gift.

There may be the possibility of offsetting CGT and CAT liabilities, but again, I wouldn't be sure on this.

chippengael said:
Also, the first €466,725 is CAT free - true?
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Yes, but this is no an annual exemption, it is cumulative, i.e. all prior gifts received (from a parent) are taken into account.


chippengael said:
Am I liable for stamp duty? How much?
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That depends on the value of the land. Because the transfer is from parent to child, consanguinity relief may apply (i.e. the duty payable is 50% less than would be the case in a transaction with a 'stranger').

chippengael said:
What other taxes are involved?
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If the land is transferred on an inheritance rather than a gift, there may be probate tax.
 
Probate tax was abolished some years ago, unless CCOVICH knows something we don't know about the upcoming budget...

The 75% rule is gone too since 2000, but there is a small gift exemption every year of €3000.00.

I wouldnt automatically rule out your mother qualifying for retirement relief- has she been declaring an income from the land for at least 10 years? You will need advice on this.

You may qualify for agricultural relief on the value of the land transferred to you if, taking the assets you are being gifted into account, 80% of your assets are agricultural. This would mean that the value of the land gifted to you would be reduced by 90% so you may well fit in comfortably under the threshold, depending on the overall value.

Again the above only scratches the surface. You really need one to one advice from your accountant or solicitor. Also it is subject to any changes in the budget.
 
Vanilla said:
Probate tax was abolished some years ago, unless CCOVICH knows something we don't know about the upcoming budget....
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I certainly don't! Sorry for any misunderstanding caused.
 
LOL, not that it would make much difference anyway, even if you were giving a hint- after all, what could you advise your clients? Erm, if you're going to die soon, you should consider doing it before rather than after the budget...

Was that really insensitive? Sorry if so.
 
Thanks for your help. She has been letting the land for more than 10 years, but she hasn't farmed it. Can she still apply for CGT relief?

As I would like to renovate the ruined buildings and turn them into holiday homes, can I still apply for agricultural relief, at least on the other 79 acres?

Finally, and this may be off topic, can someone tell me whether there is financial support from any govt agency for renovation of rural buildings currently in ruins?

Cheers
 
Without wanting to be too insensitive, a gift may turn into an inheritance if the giftor were to pass away within a set period after the gift. This was the ruling when I studied it about 5 yrs ago, i think the time period then was 2 yrs. Your best bet is to look into the agricultural relief if possible, failing that take the gift and sure the threshold of 450K odd is'nt too bad in this case. Another very small point, take a gift of 3000 worth before year end if that makes any difference, as there seems to be 3000 p.a allowable tax free.
There may be benefits available if your mother sold it to you, especially for you, as you intend running a business from it. I know she would be subject to CGT, but it may be something worth considering too (may not either as I have'nt really thought about all the implications)!
 
She has been letting the land for more than 10 years, but she hasn't farmed it. Can she still apply for CGT relief?
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I believe so but contact your accountant or local tax office.

As I would like to renovate the ruined buildings and turn them into holiday homes, can I still apply for agricultural relief, at least on the other 79 acres?
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Yes, the agricultural relief applies to whether the assets are agricultural at the date of the transfer. There is a potential clawback where you sell or dispose of the assets within I think 6 years after the transfer. Again you should talk this through with an accountant or your solicitor as there are conditions and your personal circumstances and the valuations involved will determine whether you qualify. You understand the advice given here is very general and may or may not apply to you. You need professional advice.
 
Without wanting to be too insensitive, a gift may turn into an inheritance if the giftor were to pass away within a set period after the gift. This was the ruling when I studied it about 5 yrs ago, i think the time period then was 2 yrs.
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This is indeed the in the UK tax code but not in Ireland, now or 5 years ago.
 
I would think Glenbhoy is referring to the old 75% rule- wasnt there a clawback on that gift exemption where the disponer died within 2 years of making the gift, thereby the gift became an inheritance and the 25% was clawed back? Not that its relevant anymore for future gifts in any case.
 
Hi Vanilla

You are quite right. I looked up the point just now and see that the 75% distinction was abolished on 1 December 1999.
 
What if the original poster was to buy the land for a nominal price? What would the tax/financial implications be?
 
revenue tend to look towards the substance of any transaction rather than what actually took place. They would probably affix a market valuation on the transaction.
 
I really think you need to get independant advice on the tax situation and if it does work out more cost effective as an inheritance could the land not be split up and the part you want to use now be gifted to you?
 
Thanks for all the information.


It does not seem as clear cut as I had hoped. I guess if she gifts me the land the houses stand on that should do it for now.

Cheers
 
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