CGT on transfering land from Parent to Child

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CharlieR

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We are in the process of transferring land from a parent to a child.

We are transferring 2 acres in total and using the excemption for 1 acre as we plan to build a house on it to live in. The land is worth 30,000 euro per acre.

Is there a way that we could transfer the remaining acre in pieces if needed and negate or reduce the CGT payable?

Regards


Charlie
 
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To make it clearer, my wifes mother has 2 acres of land whe wants to transfer to us, so we can build a house and move back to Cork. It is currently valued at 30k euro per acre.

At present under the tax laws we can take 1 acre free of CGT as we plan to build a house on it and then pay the CGT on the 2nd acre at 20% of the value, 6k euro. The 6k euro is paid even though no money is changing hand and we are getting the land free, my wife mother has to pay it because of the difference in values of the land from when she got it to when she gives it to us. A con if you ask me as if we did sell it we will pay the CGT aswell.

Is there a way we can we transfer this 2nd acre free of CGT by using the 19050euro per year land allowance in a 2 year period?

If we can then does this mean that we will as the recipients of the land have tax to pay on this?

Cheers

Charlie
 
CharlieR said:
The 6k euro is paid even though no money is changing hand and we are getting the land free, my wife mother has to pay it because of the difference in values of the land from when she got it to when she gives it to us. A con if you ask me as if we did sell it we will pay the CGT aswell.
Click to expand...

Just in relation to this part of your post, you would only pay CGT if the value on sale exceeded the value at €30,000 on gift to you, i.e. on YOUR gain. If you immediately sold it for its value on your acquision by you of €30,000, there would, obviously, be no again and no CGT. There is no con. Each party pays CGT on their gain on their disposal.
 
Also your wifes mother pays tax on the gain in the value of the land. Selling price (less Expenses) less Purchases (plus expenses)

Selling Price ............ 30K
Exps ....................... 1
...............................29

PR .....Say ........10K
Exps ..................1
...............................11
Gain ........................18
CGT @ 20% on 18K = 3.6K

Exps on selling Auctioneers and legal etc
Exps on purchasing legal and stamp duty etc
 
Firstly, the one acre can only be transferred tax free to your wife, if it is transferred into your joint names CGT will apply to your MIL's deemed gain.

On the CGT on the remaining acre, there isn't really any way to get around it. I take it you are going to pay the CGT on it. You won't be doing too bad, getting land worth €60k in total for just €6k.

Has your MIL been farming this land? If so, perhaps retirement relief could be claimed and thereby eliminate the CGT.

Should you sell this land in the future your deemed base cost will be €30k an acre.
 
The land has been farmed and will be until it is signed over to my wife.

One question that I also thought of was the value of the acre that will have no access to it once the 1st acre is signed over. Would it change the value of the land if it was land locked and had no access.

If so this may be another way of reducing the CGT?

Charlie
 
Hi there

I did this myself earlier this year, albeit only 1 acre for a house. There is a relief called consanguity relief for a transfer between parent and child if the child has never owned a house before.
If the child is married better to transfer the land solely to the child and then tfer between the spouses at a later date. The in-law is not a direct blood relation and therefore would trigger a higher cgt level
We also got the land valued at agricultural value, which is substantially lower than development value, which would seem what yours is. You need to submit the valuation to the revenue (your solicitor will do this), and wait for approval


On our 1 acre we paid less than 2k which was a lot better than we thought
 
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