Site Gift from Uncle: Capital Gains & Stamp Duty

J

Juran

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My uncle is gifting me a 1.1 acre site (valued at €25K). He lives in the US and has never used this land. It’s classified as ‘poor grazing agricultural land’ hence it has been valued at €25k. He inherited this site from his mother who passed away 20 years ago.
It’s with the legal team at the minute and they have not given clear direction regarding taxes so I'm doing my own digging.



Capital Gains Tax: I was told by the solicitor that my uncle has to pay Capital Gains Tax … I will pay his capital gains tax as part of our agreement. It was valued at €5k when he received it 20 years ago, the gains is €20K, 20% capital gains tax of that is €4K …
My question is why is he subject to CGT as he is not selling it and is making no profit or gains on this site?? Also he is not a resident.. does this make any difference

CAT: As it is valued below 52K, I will not pay any gift tax .. I presume there no exception here and this is correct ..

Stamp Duty: This is something I can't seem to obtain clear information about. The revenue website (see link) indicates that a land transfer between Uncle-Nephew/Niece will be subject to half the normal stamp duty. Non residential transfer (eg. land) is subject to 2% stamp duty (value 20K-30K) .. therefore I presume I will pay 1% of 25K which comes to €250. Is this correct? Does this have to be paid before the land can be registered in my name?

I would be so grateful if any could offer any advice in particular to Question 1 regarding Capital Gains Tax.

Last query .. who issues these tax bills .. Solicitor or Tax office??


All my information is from reading the Revenue website.

Thanking all in advance,
Juran
 
A few points:

1. 25K for a site is very low. Revenue may well query that. Is it a genuine valuation or a "favourable" one?

2. CGT arises because this is a disposal. It does not matter that Uncle is giving it away - he is still making a disposal and CGT is payable on the value not the consideration passing.

3. Stamp duty looks right - but only if the 25K is genuine.

No-one issues these bills - they are self assessment taxes and fall due when the transaction completes. The "legals" will carry the can for any CGT not paid - as agents for a non resident. As a result, the transaction won't conclude until CGT is paid.

The transaction cannot be concluded unless you pay the stamp duty - you would not be able to register your ownership unless the stamp duty was paid.


mf
 
mf

Thanks for your response ... and also for clarifying why CTG is applicable in this case.
I had two independent evaluations carried out ... one for 30K, and other for 25K .. I sent them both to my solicitor and they chose the 25K one. The reason its so low is that it is located in an area of special conservation ... its reclaimed bog with stony outcrops and planning would only be authorized to a immediate family members only (with a housing need). There is a good chance that I will never be granted planning once I do own it.
Secondly it is an a Gaeltacht area which is subject to strict planning conditions: must speak Irish as first language and cannot sell house for 15 years ... all these make the site of no real monetary value to anyone outside the immediate family.

Again thanks for responding to my queries.

Juran
 
To me the value actually looks quite high if it really is "poor grazing agricultural land" but it probably would be accurate if there was a possibility of restrictive planning issuing for it.

RE: CGT - Your uncle would be entitled to index the value of the land and deducted this. He could also deduct the costs involved in getting the land in his name and his annual exemption of €1,270. He could also deduct the costs involved in transferring the property to you if he is paying any of them.
 
Thanks ... I will actually pay his CTG bill as part of our personal agreement (as I will with all the legal costs, engineer etc..) Does this still mean I could deduct the transfer costs from the value ?

Also can you explain what 'index the value' means?

Rgds, Juran
 
When doing your calculations, bear in mind that CGT has increased to 22%.
 
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