CGT on split of land?

[mim45]

We are currently trying to dividing a 1.5 acre site which was purchased by my husband and his parents. The plot was purchased as one site and we both built seperate houses, them on 0.5 acre and us on 1 acre. As we are now wish to secure a mortgage on our portion the land needs to be split. We have consulted to chartered accounts whom have both come back with different answers and the revenue whom have said they don't think their is any CGT payable but of course will not give this in writing.

> The entire plot was purchased by the parents and my husbands name was included on the title
> As we have taken 1 acre we are going to pay the parents two thirds of the purchase price ( from the mortgage we are securing)
> Both properties are our PDH's

Any views on this much appreciated

 

[mf1]

The entire plot was purchased by the parents

my husbands name was included on the title

OK - so did he deal with taxation issues when this was done? He may have take a gift at the time.

Or else, you are now buying out a further one third of the land ( as H owns one third) - parents pay CGT on the disposal and H pays stamp duty at half the rate. He may also have some CAT liability. If you go on title, stamp duty will be at the full rate and there will probably be a CAT liability.

I suspect the confusion stems from not dealing with the issues at the time of
first acquisition.


mf

 

[mim45]

Thanks for the prompt reply.

You obviously really know your stuff.

No taxation issues were dealt with at the time.
Parents purchased with own funds no questions asked

Apparantly H owns half (tenency in common)
The land was purchased as a site and stamp duty was paid at time of purchase

As we were not married at the time of purchase and as I was conscious that this may be seen as a gift I kept my name off the title to avoid and gift tax that may become payable in the future. It was my uunderstanding that to add my name after marriage would not incur any stamp duty?

As we are both living on these sites and only wish to split the land, is it possible for parents to gift one third to us? I have a feeling this is going to turn into a very expensive and complicated transaction. Any advise on who would be best to contact for clarification on this issue much appreciated.

Thanks again for the detailed reply at least I know what I am dealing with now!

 

[mf1]

I think your best bet is to start with the solicitor. Set out values as at date of purchase , work out what if any contributions( purchase price/stamp duty) each made, work out values of the site to be severed ( i.e. to go to you). Take preliminary advices. Then with that info, approach a good recommended accountant ( it may be that your earlier accountants were drip fed information on a "need to know/wait 'til they ask" basis)

I don't think it is complicated but I suspect you will find certain tax liabilities looming.

mf