Tax on site received from brother

M

misspiggy

Registered User
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Hi everyone,
I'm looking for some advice.
I grew up on a farm and I'm the youngest in the family. About 8 years ago my father retired and transferred the entire farm to my older brother. Now I am married and I have obtained planning permission to build a house with my husband on a plot of land within the farm. We now need to transfer the site into my name from my brother's name.
So I'm now trying to figure out the tax implications if any - capital acquisitions tax and stamp duty? Does anyone know what the story is? I have a feeling that we might be in trouble because my father did not give me the site (in effect that what is happening now) but I'm sure the revenue won't see it that way - they'll just take it as a transfer from my brother to me, am I right? And if so what are the tax implications?
Thanks in advance, any advice appreciated!
 
you brother is alloiwed to gift you the land with no CAT implications if the value of the land is less than €43,400. for more info I suggest you check out revenue.ie
 
Hi
If you recieve a gift or inheriitance you are liable at 25% on the balance in excess of the threshold amount, the threashold amount depends on your relationship with the donor (or deceased where you inherit the property) €43,400 if you are his or her lineal ancestor, lineal descendant, brother, sister, nephew or niece.
so if the value of the land is below this amount you are not liable for CAT.

In relation to Stamp Duty if you gift land to a relative stamp duty applies at half the normal rate, and the rates for stamp duty varies between exempt and 6%, and if the value of the land is below 10k then stamp duty is exempt on this transaction.
 
There may be
- CGT implications on the brother on the disposal
- CAT implications on the recipient if exceeding the class threshold for brother/sister
- Stamp Duty implications

Unfortunately this would been better had the parent gifted as "disposal of site to child" could have been used.

I suggest a discussion with your legal advisors.
 
Under the FA 85 s63, FA88 s66 and CATCA s104 cgt payable by reference to an event which gives rise to a charge to cat is available for credit against such cat,
 
Ants09 said:
Under the FA 85 s63, FA88 s66 and CATCA s104 cgt payable by reference to an event which gives rise to a charge to cat is available for credit against such cat,
Click to expand...

Correct, but the possible implications of any disposal by the brother need to be considered & computed in the context of the whole.
 
Thanks for the replies everyone. I hadn't seen that threshold of €43,400. So worst case scenario is 10% of the value of the site minus €43,400. That mightn't be too bad. In relation to the "value" do the revenue accept a value from a registered auctioneer or what way does it work.
Is CGT not only relevant if my brother was selling me the site?
Might it work out better if my brother "sold" me the site for a small amount which he then paid CGT on or would the revenue insist that the CGT was paid on a realistic value rather than the amount the site was sold for?
 
CGT is relevant on a disposal. One does not have to receive payment for a disposal to give rise to CGT. However as has been stated relief may be available where the same event gives rise to both CAT and CGT.

Arms length values must be used. One cannot select "small values".

I don't know where you arrived at 10% value - 43,400 ?
 
The revenue would accept a valuation from a registered auctioneer in relation to the value of the land.
Your brother would be liable for cgt on the disposal of the site even if its a gift to you and the sales proceeds would be the market value of the site,
 
Sorry I meant 25% x (value of site minus €43,400)!!
I just looked up the revenue website and note that the threshold for those other than children, siblings etc is €21,700. Would there be anything to stop my brother signing a portion of the site over to my husband and the remainder to me so that the combined threshold would be €65,100?
 
You are now going down the road of tax planning and no there is nothing stopping you going down that road but if you do then you better be carefull and consult or get advice from a accountant or tax advisor as its dangerous if you dont know what you doing as your dealing with cgt, cat, stamp duty etc. and do you really beleive the value of the site be more then 43,500 ?
 
Oh I'd say it is more than that - sure wasn't any kind of site going for €100,000 over the last number of years? Now I know prices have fallen but not that much.
 
Does anyone know if banks will have any issue with giving a mortage to build a house if the site is partly owned by me and partly owned by my husband?
 
Do you mean the site is jointly owned (both names) or is the house to straddle two 'sites', one owned by your husband and one owned by you?
 
Well to get the threshold of €43,400 (sibling) plus €21,700 (other) I assume the site would have to be transferred in two separate parts. Unless the revenue would give the full threshold for a transfer of the site to both our names jointly?
 
the site can be transfered to yourself and yourhusband in one transaction and you's both be entitle to the allowances as both your names be on the deeds
 
Oh so if the site is transferred from my brother to myself and my husband the threshold would be €65,100? So if the site was valued at less than this there would be no CAT payable? Are you fairly sure about that (don't worry I'm going to check it out fully with a tax accountant etc, I just want some background info for now!)
 
Miss Piggy,

Im going through the same thing at the moment. My brother is gifting me a site, the site is worth approx 110,000 meaning that ill have to pay around 7700 stamp duty and 25% CGT for my brother. It is infuriating that the same laws do not apply for brother to sister gifting as they do for father to daughter. My brother will not be gaining anything for gifting me the site yet he will have to pay 25% CGT. No wonder this country is the way it is with stupid laws like that. The law should not just change because your brother is giving you a site instead of your father. What difference does it make??!
 
Graham_07 said:
There may be
- CGT implications on the brother on the disposal
Click to expand...

How is the gain calculated in a case like this.
If the land was in the family for generations and you cant index land for development, is the CGT on 100% of the current market value.
I know there a small approx 1600 relief but is there any other relief in the case like this because the land could have been passed down for generations there is actually no gain to the person gifting the site?

Should farmers be leaving land to the oldest and separate sites to other siblings, if they're all agreed that in the future the oldest may be giving them sites to build on anyway?
 
If there had been a proviso in the original transfer of father to son of the farm that the son was to transfer a site to his siblings in the future, then the revenue will look at a subsequent transfer of that site as being at the direction of the father so the relief may apply, depending on the circums.

The CGT is calculated looking at the value when the now owner acquired it. So the brother who owns the farm- when was he given it, what date, what value was put on it. This is the acquisition value.

There are some exemptions for disposals by farmers over 55 who have farmed for 10 years, I believe.
 
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