Selling sites???

B

bigdipper

Guest
My wife and I are thinking about selling a few sites to pay off our mortgage early and are looking for advice about wether this is a good/bad idea.
Our situation is detailed below.
Me 30, she 28.
We earn approx €37000 each.
1 15month old baby
House worth approx €270000
Land (15 acres) worth approx €200000 (purchased in 2008)
Mortgage (tracker) approx €320000 over 30 years
A lane has been constructed along the land which potentially opens up the land for numerous sites to be sold.
We are not under massive pressure to pay the mortgage but if we sold 3 or 4 sites we could be mortgage free and still have our house and about 13.5 acres left.
What tax implications are there for any such sales?
 
Is there any prospect of anyone being able to get planning permission? If no, then that shoots the whole idea down straight away.

After that, its Capital Gains Tax and, possibly, Income Tax if Revenue decide you are operating a business.

Best to get some tax advice personal to your circumstances.

mf
 
Any planning applications would need to meet Local Needs etc. We were thinking of trying to sell them "Subject to planning" and at least only people who have a realistic chance of getting planning would consider buying.
 
bigdipper said:
Any planning applications would need to meet Local Needs etc. We were thinking of trying to sell them "Subject to planning" and at least only people who have a realistic chance of getting planning would consider buying.
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That actually sounds fairly naive! I think you might need to take some professional advice - maybe from an architect or local estate agent to see how practical your idea is before drifting into something that could end up as a great deal of aggravation for a lot of people.

mf
 
You bought 15 acres of land for 200k in 2008 when the market was still fairly boyant. Now you plan to sell "3 or 4" sites to clear off a 320k mortgage. So will the sites fetch 80k-100k each? Sounds a bit optimistic given you bought 15 acres for 200k and the state of the property market at the moment?
 
aristotle said:
You bought 15 acres of land for 200k in 2008 when the market was still fairly boyant. Now you plan to sell "3 or 4" sites to clear off a 320k mortgage. So will the sites fetch 80k-100k each? Sounds a bit optimistic given you bought 15 acres for 200k and the state of the property market at the moment?
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Exactly. I think the point is that the OP presumably bought agricultural-zoned land (10-15k per acre) and is trying now to open it up for development (100k++ per acre).

Personally I doubt this will be a viable plan unless there are particular circumstances which mean the sites can be bought by people who don't need to meet local needs criteria.

If it was that simple I'm sure everybody would be doing it or, indeed, would have done so years ago.

SSE
 
Like the OP, I bought 8 acres of agricultural land in year 2000, in a rural area with intention to build one house for myself. In time my circumstances changed and I decided not to go ahead with the plan to live there.

In planning speak, the land was governed by "rural housing control"
provisions meaning that only persons from the local area would be accomodated for building houses.

The land originally cost 46000 Irish punts and since then I have sold five sites at an average price of 125,000 each.

None of this has been easy, I was through the bord pleanala appeals process three times and succeeded on appeal in two of these three
cases.

The key is to put forward a viable site with good and safe access to the road. The size of the site should be generous .75 to one acre.
The person(s) purchasing need to have a genuine housing need and be rooted in the local area.

There's not much more to it

All sites were sold subject to planning permission. A contract is drawn up and signed by both parties. The sale is only concluded if the permission is granted

I would differ quite dramatically with some of the other contributors here.
There is nothing naive about the OPs intention. He highlighted that a new road or lane has been opened up and thats probably going to help hugely.
He has absolutely nothing to lose.
 
Aristotle, You might be right but I doubt it

Im selling another site at the moment and its looking promising. When I was selling the 1st site there was no shortage of people telling how it aint gonna happen.

The councils are strapped for cash and are very happy to receive development contributions arising from these planning applications which must be paid before building can commence.

As a matter of interest, why do you think its yesterdays game ?
If you live in a particular rural area and you need a house then you
have no choice but to purchase a site unless theres a suitable 2nd hand house for sale.
 
aristotle said:
Sounds like yesterdays game to me.
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Sounds like envy to me.

Know someone who has been trying to sell a site for 2 year. Not one person has looked at it through the auctioneer. He is pricing himself out of the market by asking too much

Be very competitive with your price then sell the sites and make a few bob. If your greedy you will make nothing
 
Yes that's absolutely correct

When I was selling sites three years ago for 125000 (considered very cheap at the time) some neighbouring sites were looking for 160,000 and they are still for sale, but now at 100,000. My site is for sale now at 80000

And even at a low price you might still be waiting months to find a suitable purchaser who is likely to qualify and who can get access to the funds

I would advise the OP to get a sign made up with his own number on it and have it put up on the land and to deal directly with any potential purchasers himself.
Theres usually a lot of discussion with sites about entrances, about size of site, about drainage, about wells, about boundaries, about septic tanks
and about services to the land.Quite frankly, Some estate agents can just get in the way of these discussions. Also the OP needs to be comfortable that the buyer has a good chance of getting planning permission before agreeing a sale
 
Not a bit envious thankfully. But buying land in 2000 and selling sites off of it during a property boom over a 10 year period is not the same as what the OP is suggesting.
 
Thanks for the feedback.
One question for Importer. What tax did you have to pay on the €125k you were getting for the sites? I'm inclined to agree with you and put up a sign and see what happens - nothing to lose. If we only managed to sell one site for say €100k would it be advisable to put this into the mortgage or invest it somewhere else? Would this mean we'd have to give up our tracker mortgage? So many questions for my little "naive" brain!
 
Yes you will need to pay capital gains tax on the gain at the rate of 25%

Presumably most of the selling price will be profit so if you sell for 100,000
you will probably have a capital gains tax bill in the region of 18000 - 23000 depending on what you paid for the land in the first place.
Solicitors fees, estate agents fees and other direct selling costs can be used to reduce the gain. A proportion of the original buying costs can also be used to reduce the gain.

When you sell the site you will have to renegotiate with your lender
about your loan. I think you might have a struggle on your hands trying to get them to continue with the tracker . My guess is that they will not want to allow you to continue with the tracker on a reduced loan especially since all banks are losing money on trackers at the moment.

I hope this helps
 
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