Land transfer Father to son.

[chlc]

I have just moved house and now want to sell my PPR, it is on it's own site , at the back of my property their is a strip of land apprx 1/3 of an acre owned by my father, it is zoned residential but he cannot get planning on it through access problems, I suggested to him to transfer the land into my name and sell the whole thing as one lot. The auctioneer has said it will definitely increase the value of my PPR going to market by 200k.We have agreed the price ratio of property and house between us, we have a potential buyer who is keen to buy the the house and land as one lot through the auctioneer.I know the stamp duty to be paid on transfer, but are there any other tax issues that I need to be aware of as we want to be fully compliant in this regard, or is there a better way to do this deal?

1.Would there be any CGT issue if the land is transferred into my name and sold straight away?

2. I can gift my father up to 46K, what would his CAT implication be if I gift him an extra 120k

 

[Vanilla]

First of all theres no need for the land to be transferred into your name- this would give rise to a charge for stamp duty, and is unnecessary. Your father can sell directly to the purchaser. He would then have to deal with a CGT problem- but it would be the same if he transferred to you in any case. CGT will depend on how much the land cost him originally, or how much it was valued at if he inherited or was gifted it. It will also depend on his personal circumstances, whether he could claim retirement relief, the costs of acquisition and disposal etc.

 

[chlc]

The reason for transferring the land is the increase in value of the land and house as one entity , the house alone is valued at 450k, but with the land attached it's value is 650k, the transfer is going to be as a gift to me which then incurrs the stamp duty. Are you saying there is still a CGT problem if the land is transferred to me, I will pay no CGT if I sell the house on it's own, but he would have difficulty selling the land as it would be land locked (The auctioneer has a buyer for the lot).So we are trying to find the most tax efficient way for him to get value for the land.We are just unsure of the tax implications.

 

[Vanilla]

If the value of the house rises by €200k because of the land, then I doubt if the land is going to be seen as just the curtilage of the house.

But in any case, if you want your father to transfer the land to you, then on THAT transfer, regardless of whether its a gift or not, he is going to open himself up to a CGT charge. The land will have to be valued on the transfer to you, and its on that value that the CGT computation will be based. And of course there's the consequent stamp duty. Unless you are saying that the land has a very low value - but if that is so, why would there be such a large increase in the sale price of your house with this land attached?

 

[chlc]

No not saying there is a low value, the figures are from the auctioneer, I think you have answered my question there is liability on him for CGT regardless of transfer, due to the valuation the auctioneer would make on the land for stamp duty purposes he would still pay CGT on that figure .Thanks for your help.