Gift from Parent to child of more than an acre

[EmilySW]

Hi all, I hope someone can advise.
My parents offered to gift me a site to build a house and we applied for planning but we’re turned down for percolation. Originally we were going to take an acre at front of a field but now It looks like we will have to build at the back of the land. That brings the site to 1 and a half acres. My parents bought the land in 2006 for agri purposes but it had planning on it (now expired) so it was expensive. It is worth less now than what they paid for it. I am wondering what the tax implications would be for us both if they transferred a site of 1 and a half acres. Site is valued at 90000 with planning (if we get it).
Thanks in advance for your response,

 

[noproblem]

If it has problems with percolation I'd have nothing to do with it and the yearly changes we're seeing with our weather and flooding all over the place only confirms it for me. Unless there's mains sewerage i'd run a mile and not even the new septic tanks, etc, they have today would change my mind on that. I have never in my life seen so many house owners with complications regarding all sorts of septic tanks. Why it's not major news I cannot understand

 

[RedOnion]

Hi Emily,

If I understand it correctly, the tax exemption normally applied with the 1 acre site would be for your parents to be exempt from capital gains tax.

It is worth less now than what they paid for it.

If it's worth less than they paid for it, then it's to their advantage not to have the CGT exemption applied. This way they'll have a capital loss to carry forward.

I am wondering what the tax implications would be for us both if they transferred a site of 1 and a half acres.

For you, as recipient of the gift, normal CAT (gift tax) applies. If no previous inheritance from parents, then it'll form part of your lifetime threshold. The gift should be to you, singular. If it's jointly to you and your partner / spouse, they could end up paying gift tax on their share. If you're married, you can put it in joint names after without any tax implications. To get a mortgage to build it'll need to be in joint names.

You pay stamp duty on the transfer from your parents regardless.

It might be worth getting it transferred before planning is granted.