Purchase land from brother/planning

F

Freddy

Guest
I am about to start the planning process for a house which we intend on using as permanent residency. The land was recently transferred from my father to my brother (farmers). We can have a site from my brother free of charge, but will have to pay his and our legal and tax fess.

I have two questions:
1. Can we apply for planning before getting the land transferred/gifted from my brother to me hence avoiding paying the legals fees/ taxes etc. which we and my brother will incurr in case planning is not granted
2. How does one determine the value of the site?
 
All you need for planning is a letter from the owner of the site giving permission tobthe applicant to apply for planning permission. I dont know if this would effect any possible local needs requirements?

Land value can be ascertained by local auctioneers
 
Thanks, can you explain what local needs requirements are?
 
Freddy said:
I am about to start the planning process for a house which we intend on using as permanent residency. The land was recently transferred from my father to my brother (farmers). We can have a site from my brother free of charge, but will have to pay his and our legal and tax fess.

I have two questions:
1. Can we apply for planning before getting the land transferred/gifted from my brother to me hence avoiding paying the legals fees/ taxes etc. which we and my brother will incurr in case planning is not granted
2. How does one determine the value of the site?
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Just wondering why didn't your father give you the site directly instead of via your brother. The fact that your brother will give you a free site will not stop the fact he will get hit with a hefty capital gains tax bill that you will have to pay for him I assume. This could have been avoided.
 
Troy McClure said:
Just wondering why didn't your father give you the site directly instead of via your brother. The fact that your brother will give you a free site will not stop the fact he will get hit with a hefty capital gains tax bill that you will have to pay for him I assume. This could have been avoided.
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OP says the land was recently transferred from father to brother, so it's unlikely there'll be further CGT.

If father and brother are both farmers, the land may have been transferred without a CGT liability arising (retirement relief, CAT relief).

Whereas if OP isn't a farmer there would possibly be liability to CGT and/or CAT, if father was to transfer land to him.
 
both are farmers, so there was no CGT between them. But now as far as we know my brother will be liable for CGT in transfer from him to me (Troy- yes should have done all this before transfer from father to brother but unfortunately didnt, just wasnt on the horizon at the time). We will be covering this. Hoping that there will be no implications on father/brother transaction as a result of the next brother/sister transaction. Need to meet a tax person to figure out the costs. AT the moment we see our costs as being: 1. our CAT value of site less threshold 33208 at 30%; 2. Stamp Duty somewhere between 1 and 6% probably more like 6% as site value prob around 80000 but maybe we could get away with buting it under agricultural land (adverts for sites in area are 100000 plus); 3. Capital Gains Tax 30% of gain (no idea how this is established- again i guess its more of what was the value in father/son transfer Vs brother/sister transfer...agri/house use; and finally solicitor fees for both parties.
 
Freedy, look at your local councils planning section &/or development plan for information on rural housing need. do get some advice before submitting on whether your application will impact on your siblings future chances of gaining PP
 
Hi Freddy,

While it isn't a problem to apply for planning while your brother owns the land, he will then be gifting you a site which will presumably be worth a lot more than the agricultural land it is at the moment.

It would likely make more sense to let him gift you agricultural land and then you get planning permission and it becomes a site.

That way you pay stamp duty, CAT and the brother's CGT on a lower valuation.

Before you pay any taxes, legals, etc check with the planning department whether there is any hope of you getting planning in the first place - some areas have very restricitive rules and eg ownership of a different house or working in a different area could preclude you from getting planning.

Sybil
 
thanks Mrs Vimes, would the check with the planning department take palce a pre planning meeting or just general query re my current circumstances
 
Mrs Vimes said:
Hi Freddy,

While it isn't a problem to apply for planning while your brother owns the land, he will then be gifting you a site which will presumably be worth a lot more than the agricultural land it is at the moment.

It would likely make more sense to let him gift you agricultural land and then you get planning permission and it becomes a site.

That way you pay stamp duty, CAT and the brother's CGT on a lower valuation.

Before you pay any taxes, legals, etc check with the planning department whether there is any hope of you getting planning in the first place - some areas have very restricitive rules and eg ownership of a different house or working in a different area could preclude you from getting planning.

Sybil
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Revenue are not idiots. Not only that, but you will do well to get an evaluator to go along with this. Agricultural land values are relevent when you are transfer a large acreage. When someone transfers an acre of land or probably less it's obvious it's not for farming. Especially so if it has road frontage. You can haggle on the evaluation amount with the person doing it but you will need a pure cowboy to go along with whats suggested above. Even if you find one the size of the plot would be an obvious red flag to revenue.
Your solicitor can probably calculate your brother liability but they are not tax accountants and it may not be accurate.
 
Troy McClure said:
. Agricultural land values are relevent when you are transfer a large acreage. When someone transfers an acre of land or probably less it's obvious it's not for farming. .
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No matter what the size of it the value will be agricultural as it has no planning so it will have a lessor value. There is no guarantee of planning. People can avoid taxes if they plan well and there is nothing wrong with that.

OP I would certainly have a chat with the local planning office to see what they think, size of size in relation to septic tank, location and whether you can put an entrance on the road frontage and type of house would be important things to consider. Also your brother must make sure he is not landlocked as a result of transferring site to you.
 
Was there a family 'understanding' between your father and your brother that although your father was to transfer the land to your brother, it was on the basis that if you needed or wanted a site your brother would have to make that available to you?

This is quite common in farming families and if this is the case you could make a case to revenue that the gift of the site is really from your father, which would in turn change the threshold. It is important that you think about this aspect before proceeding- if this is the case your solicitor can draw up a deed of trust and you can make a case to revenue which might eliminate your CAT liability. We did this quite recently in a file successfully and the child then also qualified under the following relief.


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Bronte said:
No matter what the size of it the value will be agricultural as it has no planning so it will have a lessor value. There is no guarantee of planning. People can avoid taxes if they plan well and there is nothing wrong with that.
Thats a fine theory. Getting a reputable evaluator that doesn't have revenue red flag on them to agree with this is another thing. It may go through but I certainly would not bank on it.
This is one of the reasons attributed to buying plots with a price agreed 'pending' granting of planning permisson. If revenue think it's for a plot they will question the evaluation of you small piece of land, and the fact it may not currently have planning on it is irrelevent to this. Like I said they are not idiots.
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Troy McClure said:
Thats a fine theory. Getting a reputable evaluator that doesn't have revenue red flag on them to agree with this is another thing. It may go through but I certainly would not bank on it.
This is one of the reasons attributed to buying plots with a price agreed 'pending' granting of planning permisson. If revenue think it's for a plot they will question the evaluation of you small piece of land, and the fact it may not currently have planning on it is irrelevent to this. Like I said they are not idiots.
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A sale of a site "pending planning" is a very different thing to what Bronte and others have suggested here. Such a contract is conditional on the planning permisison being obtained, and therefore the consideration / market value under the the contract reflects this condition.

If the transfer takes place between siblings (or as Vanilla has suggested, is deemed to take place from father to son), then the connected persons rules kick in for CGT i.e. a deemed transfer at market value. So, the question is, what value would the unzoned site fetch if it were put up for sale in the open market. There's no question that this value would be substantially less than the value of a site with planning permission, so it absolutely is relevant whether the transfer happens prior to or after planning permission is obtained.
 
mandelbrot said:
A sale of a site "pending planning" is a very different thing to what Bronte and others have suggested here. Such a contract is conditional on the planning permisison being obtained, and therefore the consideration / market value under the the contract reflects this condition.

If the transfer takes place between siblings (or as Vanilla has suggested, is deemed to take place from father to son), then the connected persons rules kick in for CGT i.e. a deemed transfer at market value. So, the question is, what value would the unzoned site fetch if it were put up for sale in the open market. There's no question that this value would be substantially less than the value of a site with planning permission, so it absolutely is relevant whether the transfer happens prior to or after planning permission is obtained.
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You are misunderstanding me here. I will put it simply. Go to a local estate agent and tell them you want an evaluation of an acre of land that he will see on their visit, which they will have to do, is small and has road frontage. No planning et al.
Come back to me and tell me this evaluation is agricultural land prices. Revenue have red flaged evaluers who try to pass this off. It is not a black and white issue as some are suggesting here. It's not either or. Anyone I know in this line of work will not put agri values on a small plot. The value may be substantially less than a site with PP but it will be substandially more than agricultural land which changes hands in a volumn.
 
Troy McClure said:
You are misunderstanding me here. I will put it simply. Go to a local estate agent and tell them you want an evaluation of an acre of land that he will see on their visit, which they will have to do, is small and has road frontage. No planning et al.
Come back to me and tell me this evaluation is agricultural land prices. Revenue have red flaged evaluers who try to pass this off. It is not a black and white issue as some are suggesting here. It's not either or. Anyone I know in this line of work will not put agri values on a small plot. The value may be substantially less than a site with PP but it will be substandially more than agricultural land which changes hands in a volumn.
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I understand what you're saying Troy, and I'm telling you you're wrong, and so is any valuer who is silly enough to overvalue what is a piece of agri land until the day planning / zoning is obtained.

And trust me, I know a LOT more than you about Revenue's position on such matters... ;)
 
Perhaps you feel you do. I have first hand experince of this on a few occasions. And like I say go to an auctioneer and put your single acre road frontage evaluation to the test and we'll see whose wrong.
 
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