Key Post: Building on family land

J

jock04

Guest
We're about to embark on building a house on my wife's family's land. To help with their own mortgage we will purchase the land rather than be gifted it. We were thinking of a sum of about €40k. They don't need the money immediately, but certainly will in a few years.
I'd appreciate any advice on how to minimise both the stamp duty we'll have to pay on the land & also the capital gains tax my in-laws would be liable for.
Thanks
 
Re: building on family land

Can someone please clarify this?

Does this mean that by paying for the land instead of receiving a gift that the cost would be 40000 + stamp duty + interest on the 40000 (assuming a mortgage)?

Plus on top of this paying CGT for the person receiving the 40000?

Whereas receiving the land as a gift from the family would have no tax implications and no interest owed to the mortgage company????
 
building on family land

Doctor
What you've laid out is pretty much exactly what my bank told me, except that we were advised that even if the land was sold, rather than gifted, to a blood relative there would be no stamp duty payable.
Would appreciate anyone's input as to the accuracy of this information ( you'd hope they'd be right!) and what if any are the best ways to minimise the tax bills.
 
Re: building on family land

Ok so there would still be CGT payable.

I am in a similar situation as well but it does seem like the only option available.
 
Building

As far as I know the rate of CGT is halved when the transaction is between members of the same family.

m
 
buildeing on family land

Have just gone through all this my wife was gifted the land by her father hence no stamp duty, she gave him a gift of 45k and this does not exceed the threshold for a sibling to give to a parent hence no c.g.t. or c.a.t. tax implications.the land is transferred into her sole name and the house deed is also in her sole name, and anytime later the house and deed can be transferred into joint names without incurring any penalties from revenue.hope this helps.
 
building on family land

CHLC & Mickey, great info, thanks very much.
Doctor, how far down the road are you with your project, & what area are you in?
 
our story

When we went through this crap, we had to get the house and land in both our names for the bank to give us the mortgage. We were not married at the time but were due to get married in a further 6 months.
Because my wife was legally a stranger we had to pay gift tax on her share as such despite the fact there would have been no gift tax to pay when we got married.
Maybe the banks are more flexible now allowing all the deeds in one of the partners names but IP would not allow this with us 3 years ago.
 
Re: our story

Based in the south east myself Jock.
We are getting married in 18 mths so that looks like that complicates things.
Just sorting out the details of the site at the moment.
So a long ways to go.
 
Building on family land

Kerinsp,
The bank wouldn't let you both have a mortgage to build on land your wife-to-be already owned?
Doctor, hope this has helped you too. I'm building in Connemara myself, if you've started doing your sums my architects fees are €3.5K inc vat, he'll supervise the building work through to completion for that too. If I can gather any more info, I'll post it here.
Best of luck with both exciting ventures!!
 
Re: >> Building on family land

I'm not sure that the above info is still correct. I came across this recently and it worked as follows:

The property was gifted not sold:

The value of the property as a gift was below the threshold for stamp duty: No Tax arises.

There is capital gains tax due by the transferer on the difference between the purchase price and the price at time of transfer ( regardless of whether they are making money off it or not)

It seems crazy to pay tax when no gain is made. I'm not sure how this would work if property is in family for generations.
 
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