Is Capital Gains Tax payable on compensation for loss in property value resulting from a land sale?

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Buachaill Dána

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I am part-owner of land which may be sold going forward. I am also sole owner of an adjoining principal private residence which will suffer a loss in value due to change of use of the land for sale. Can I set off part of what I may receive from the land sale against the loss in value of my PPR (as estimated by a recognised valuer) and hence reduce my CGT bill on the gain in value of the land?
 
How would that work when your PPR is exempt from CGT (assuming that you've never rented it out)?
 
That's exactly the point. If part of the sale proceeeds can be categprised as compensation for consequent loss in value of a CGT-free asset, then there is a case for exempting that compensation from CGT.
 
But you said that the payment due is for the land itself?
I don't see how the PPR comes into it at all.
 
Buachaill Dána said:
I am also sole owner of an adjoining principal private residence which will suffer a loss in value due to change of use of the land for sale.
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I'm assuming this is a farmhouse that you are retaining and selling your part-ownership in the farmland. And your argument is that the house is no longer as valuable because it will no longer have access to the land? It seems a bit dubious to claim a loss of value unless the land will have have a change of use to a quarry or a landfill or something.

As @ClubMan points your PPR will be CGT exempt anyway.
 
Buachaill Dána said:
I am part-owner of land which may be sold going forward. I am also sole owner of an adjoining principal private residence which will suffer a loss in value due to change of use of the land for sale. Can I set off part of what I may receive from the land sale against the loss in value of my PPR (as estimated by a recognised valuer) and hence reduce my CGT bill on the gain in value of the land?
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No.

If your residence is likely to be devalued because of the sale, that's a matter to consider when weighing up whether or not to sell the land.
 
NoRegretsCoyote said:
I'm assuming this is a farmhouse that you are retaining and selling your part-ownership in the farmland. And your argument is that the house is no longer as valuable because it will no longer have access to the land? It seems a bit dubious to claim a loss of value unless the land will have have a change of use to a quarry or a landfill or something.

As @ClubMan points your PPR will be CGT exempt anyway.
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" And your argument is that the house is no longer as valuable because it will no longer have access to the land?"
You are right on the first count, but not the second. The exit to the main road will be altered substantially and no longer accessible directly from my house. A new internal side road will be necessary. It will meet the main road to a planned housing development at an internal junction.
 
Buachaill Dána said:
The exit to the main road will be altered substantially and no longer accessible directly from my house. A new internal side road will be necessary. It will meet the main road to a planned housing development at an internal junction.
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I'm not a property valuer. But that does not to me sound like you are materially reducing the value of the house.

In any case it seems moot as it's your PPR.
 
T McGibney said:
No.

If your residence is likely to be devalued because of the sale, that's a matter to consider when weighing up whether or not to sell the land.
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See my reply just now to an earlier post. I have already weighed things up, and should perhaps have clarified in the OP that I regard "part of what I may receive from the land sale" as a payment of compensation for the presumed (subject to a professional valuation) loss in sale value of the PPR.
 
Buachaill Dána said:
I regard "part of what I may receive from the land sale" as a payment of compensation for the presumed (subject to a professional valuation) loss in sale value of the PPR.
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You may, but will any anybody else, in particular Revenue?
I doubt it.
You should get expert advice on this if you're intent on pursuing your train of thought and potentially making an expensive mistake.
 
Gordon Gekko said:
The payment for the loss in value of your PPR is tax-free.
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Even if it's only the seller that has some vague idea that some portion of the selling price is attributable to the alleged loss in value of their PPR as a result of the sale of the land? Surely some more concrete evidence would be required in order to support a CGT filing/payment that tried to exclude some part of the profit from liability for CGT?
 
ClubMan said:
Even if it's only the seller that has some vague idea that some portion of the selling price is attributable to the alleged loss in value of their PPR as a result of the sale of the land? Surely some more concrete evidence would be required in order to support a CGT filing/payment that tried to exclude some part of the profit from liability for CGT?
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Of course not. I mean in cases where it’s clear, e.g. CPOs where a separate payment is made for the reduction in the value of the adjoining property, or where a competent and honest valuer states, in writing, the €X is attributable to the reduction in value of the PPR.
 
Gordon Gekko said:
Of course not. I mean in cases where it’s clear, e.g. CPOs where a separate payment is made for the reduction in the value of the adjoining property, or where a competent and honest valuer states, in writing, the €X is attributable to the reduction in value of the PPR.
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Ok, thanks. But that's not the case here as far as I can tell.
Buachaill Dána said:
and should perhaps have clarified in the OP that I regard "part of what I may receive from the land sale" as a payment of compensation for the presumed (subject to a professional valuation) loss in sale value of the PPR.
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ClubMan said:
Ok, thanks. But that's not the case here as far as I can tell.
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Yes, which is why I said “in cases where it’s clear”.

In the OP’s case, he or she is just plucking something out of the sky. Best to speak with a competent and credible valuer. It does sound tenuous though.
 
Gordon Gekko said:
Yes, which is why I said “in cases where it’s clear”.

In the OP’s case, he or she is just plucking something out of the sky. Best to speak with a competent and credible valuer. It does sound tenuous though.
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Back again. The compensation commitment forms part of a legal agreement with the prospective purchaser. I'm reluctant to give details in an open forum!
 
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