CAT/CGT query

[censuspro]

Example

Joe and Jim are brothers. Between them they both own an equal share in a house and some land. Joe gives his brother his share of the land in exchange for Jim’s share of the house. Assume the house and land have the same market value.

It appears that this would trigger a CGT/CAT liability since they are both disposing of an asset. I understand that their is CAT relief on the same event but is there any relief from CGT since neither of them are effectively gaining anything?

 

[Breninio]

Why would there be a CAT event if the land exchanged for the property is equal in value?

 

[Paddy199]

Agreed. Remember the consideration can be cash equivalent.

 

[jpd]

The CGT is based on the current value of the properties exchanged (half-share of the house and the land) less and the value at the time of acquisition. It is the value at the time they acquired the asset that counts, not the value they exchange them at.

Some of the CAT due on the transfer between brothers can be offset by the CGT paid, if any.

 

[Breninio]

JPD, I agree with the CGT treatment as you have set out. But how does a CAT event arise. If you transfer half an acre of land worth €100k to someone in exchange for a share in a property worth €100k, where is the gift element?

 

[jpd]

Oops, missed that. In this case I suspect there would be no CAT liability.

 

[John Conlon]

Also stamp duty with 50% consanguinity relief