CGT liability on family land

C

claregirl

Registered User
Messages
22
Hi all,
My brother is gifting me half acre site to build a house. We have been informed he will incur CGT even though there is no money involved. However, we are not entirely sure how to calculate it.

The land was transferred from my parents to my brother approximately eight years ago and no money exchanged hands (except for land registry, solicitor fees etc.).

So would we be correct in saying the taxable gain is calculated by the increase in market value in the eight years or so that he has been the owner? No planning permission so going on agricultural value.

Also, does anyone know if there is an allowance apart from the 1,270 he might be entitled to, seeing as we are brother and sister?

New to all this business so any information would be greatly appreciated. Thanks in advance..

Claregirl
 
According to the revenue site when passing assets between siblings you get €47,815 tax free and pay 20% on the remainder.This is of course unless your brother has given you other assets or money in the past..If the land is zoned as agricultural then the above figure should more than cover its cost, however if its zoned for housing prob wont cover all of it.
 
What you have above is correct.

Your brother is liable on any increase in the gain from the valuation date to the date of disposal.

He is entitled to the annual exemption on the proviso it has not already been utilised.

You may also have a CAT liability depending on the value of the site if the site is valued at over €49,682
 
Thanks to both Rhino 1 and thespecialon. No my brother has never been involved in any transactions like this in the past with anyone and he hasn't used any annual exemptions.

Outline permission was granted on that site a few years ago but has expired with the last two years, does this mean the land reverts back to agricultural? Hope this doesn't affect the valuation. According to the info I just got, an agricultural valuation would be low enough and the exemptions would cover the CAT/CGT liability..

Thanks again
 
To be honest although im not 100% sure - i think the valuation of the land will be based on how the land is zoned - eg Agricultural, Amenity ,low density housing etc.. You county council should be able to tell you the zoning of the land..

By the way if this is not the case please let me know as my father has some sites zoned for low density housing,however planning permission has never been sough on them, so if he were to trasfer some of them to me would make a big difference if valuation is based on zoning or on planning permission approval
 
claregirl said:
According to the info I just got, an agricultural valuation would be low enough and the exemptions would cover the CAT/CGT liability..
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Just to be clear, CGT & CAT are totally different taxes and CAT exemptions do not apply to CGT. A number of assumptions have been made during the above discussion, some of which may not be relevant to your situation. You and your brother need specific professional tax advice.
 
thanks to all for the info. I had previously been informed that I would be liable for CAT as I was acquiring the site, and my brother would be liable for CGT as he was disposing of the site. I was told that the value of the CAT liability could be offset against the CGT, however someone else told me this is not true. I think the best thing to do is talk to a Tax consultant.

thespecialon, regarding the zoning of the land, when I get info on it I will let you know!
 
Hi again,

Apologies for adding to my own post, don't mean to bump up my post but I had some more queries about this issue..

I am aware there is a "Gift Allowance" of over 49k that I can use towards my CAT liability. This amount will more than cover the cost, so I expect the CAT to amount to 0. My question is, Is there a similar allowance my brother could use (apart from the 1,270) for his CGT liability? I have looked at the revenue website and can't find any mention of such (there is a mention from parent to child, not brother and sister).

Second, I've heard that CAT can be offset against CGT, how does this work? As I expect my CAT to amount to 0 would this mean there would be nothing to offset the CGT?

Have rang tax office, they give me general info but not really specific to my case. Just wondering if anyone has gone through a similar situation. Any info greatly appreciated.
 
Hi Clubman,
Yes we asked an accountant but he said the best thing would be to ask the revenue directly. I rang them, with a view to going in to discuss the situation and ask advice in person. The man I spoke to said there was no such service, and we should send in the CGT return with what we thought was correct and if they didn't agree with it they would contact us! He told me to look up the information on the website, but like I said, it's general info and not specific cases. Our Accountant said he was wrong, they are there to advise people etc so I might ring again and talk to someone else..
 
This is no use. Your accountant is simply wrong. You need to get advice for a tax expert. Revenue will just give summary info and not advice, you cannot be sure that it will be correct and acting on partial or erroneous info that they give out will not be accepted as an excuse for mistakes that might arise.
 
I honestly think first of all you should change accountants - its a basic tax issue that can be resolved quite easily
- get the site valued by a valuer if you haven't done so already, couple hundred euro, this should be done on transfer of title anyway,
- try get the relevant forms from the revenue and fill them in yourself and don't waste money on that accountant.

I doubt you will end up paying any tax.
 
Yes I'd better get some more advice. We are thinking we won't have to pay much, if anything, either. Just don't want to make a mistake. Definately want to do things correctly and above board. Thanks
 
claregirl said:
Hi Clubman,
Yes we asked an accountant but he said the best thing would be to ask the revenue directly...
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I honestly can't believe there is an accountant anywhere who would say this. Perhaps you were talking informally to a student or someone retired from the profession? Accountants make a living from dispensing tax advice to the public. Even apart from obvious self-interest, it wouldn't make sense for an accountant to routinely direct people to the Revenue for assistance. Given the notorious unreliability of the Revenue's "advice", any accountant telling a client to rely on Revenue guidance would be exposed to a professional negligence claim were the client to suffer financial loss as a result.
 
claregirl said:
Yes we asked an accountant but he said the best thing would be to ask the revenue directly.
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Completely agree with Ubi on this. That's a pretty lazy and completely unprofessional thing to say. If you paid money for that advice i'd ask for it back.

The transaction (on the face of it) appears reasonably straight forward and any person versed in dealing with tax matters should be able to advice you very quickly.
 
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