Capital Gains on Land

[susanr]

Hi There,
I bought 5 acres agricultural land 2 years ago for €63,000. I got planning permission for a house and am planning on selling 3 acres with this planning permission for about €110,000. How is capital gains calculated on this and is there any way of keeping the amount of capital gains tax that I have to pay to as low as possible?
Many thanks

 

[Vanilla]

is there any way of keeping the amount of capital gains tax that I have to pay to as low as possible?
Many thanks

Yeah, pay a professional adviser to do it for you!

But strictly speaking and without possession of all facts, 3/5 x 63000 is the acquisition cost ( unless one part more valuable than other and apportionment should be geared). Add on legal fees and stamp duty and all other costs of acquisition, add on planning fees even though they are, strictly speaking, not allowable. Deduct from the sale price ( also deduct all sale costs, auctioneer fees, legal fees etc) and pay 20% on the balance. Roughly.

 

[ubiquitous]

... 3/5 x 63000 is the acquisition cost ( unless one part more valuable than other and apportionment should be geared). Add on legal fees and stamp duty and all other costs of acquisition, add on planning fees even though they are, strictly speaking, not allowable. Deduct from the sale price ( also deduct all sale costs, auctioneer fees, legal fees etc) and pay 20% on the balance. Roughly.

This treatment is not correct. This is clearly a "part disposal" situation, where different rules apply. Also it is highly unlikely that the rule of thumb "3/5 x 63000 is the acquisition cost" will apply in practice.

Get proper professional advice from a knowledgeable accountant or tax consultant.

add on planning fees even though they are, strictly speaking, not allowable.

Planning fees should be allowable as they are clearly enhancement expenditure.

 

[Bobbyg]

I am not 100% but i don't think you simply multiply 63000 by 3/5 to get your cost. There is a rule for part disposal of an asset and i think you multiply your cost by the sales procceeds and divide that by the sales proceeds + remaining value of the asset.
i.e 63000 x __110000___
110000+remaining value of asset

 

[Vanilla]

This treatment is not correct. This is clearly a "part disposal" situation, where different rules apply. Also it is highly unlikely that the rule of thumb "3/5 x 63000 is the acquisition cost" will apply in practice.

Get proper professional advice from a knowledgeable accountant or tax consultant.



Planning fees should be allowable as they are clearly enhancement expenditure.

I did say roughly! But planning fees are not allowable according to a Revenue booklet I have although in practice everyone seems to put them in. Go figure.

 

[ubiquitous]

I did say roughly!.

There is no guarantee that a CGT liability estimate, calculated per your recommendation, will be anywhere near the correct liability as calculated using the appropriate "part disposal" rules.

But planning fees are not allowable according to a Revenue booklet I have although in practice everyone seems to put them in. Go figure.

Very dangerous to rely on Revenue booklets - especially for the purpose of advising third parties on their CGT liabilities.