Parent to child site transfer - Tax implications

[Bryson]

Looking for advice on the following situation.

Parents wish to give son site. Site is zoned residential but does not have planning attached. Site is currently valued at 100k. Parents have not given son any tax liable gifts previously.

Son wishes to build house on site and then sell property once built.

Son is married.

Question: If site is transferred by parents into sons name and son then transfers into joint names of spouse and himself before obtaining planning permission and subsequently building and selling the house what are the stamp / CGT and CAT implications?

Any advice is very much appreciated

 

[march_hare]

Hi Bryson

I'm not an expert but have just gone through this myself receiving a gift of a site from my parents to build my home on, my husbands name is not going on the title of the site itself just yet.
As far as I know, the spouse of the child receiving the gift will be liable for gift tax if transferred into their (even joint) name less than 3 years after the site transfer. The transfer of a site from parent to a child is only exempt from the relevant taxes, CGT (for the parent disposing of the site regardless of any money changing hands or not) and stamp duty, if the site is to be used for the purposes of the child's principal private residence and is under a certain threshold market value at time of transfer €254 k approx.
Not sure of the implications down the road if the house is sold off etc.

 

[aetius]

CGT - TCA97 s603A effectively states that an exemption from capital gains tax arises where a parent transfers land, valued at not more than €254,000 to enable the child to build a principal private residence.
If the child subsequently disposes of the land (other than to their spouse) and the land does not:
(i) contain a dwelling house which was constructed by the child since the acquisition of the land; and
(ii) which had been occupied for a period of at least three years;
then the chargeable gain which would have accrued to the parent shall accrue to the child.

This is in addition to any gain arising to the child on the land itself. Where a child suffers such a claw back, they may subsequently receive a further exempt land transfer.

Stamp Duty Exemption

The transfer or lease of a site to a child, the purpose of which is for the child to build their own home. The market value of the site must not exceed €254,000. The exemption is subject to a number of conditions and applies to instruments executed on or after 6 December 2000.