Getting a House Site as a Gift - Capital Gains Tax?

Lemlin

My other half and I are building a house. My father is giving us the site.

The bank suggested that we only put the house into my name as we may have to pay capital gains tax on the site if we put the house deeds in both our names. Is this true?

Legend100

If your dad gifts you the site and its market value is less than 500k, then it is exempt from CGT if it is for the purpose of bulding a dwelling house for use as your PPR. You will also have the group 1 threshold for capital acquisitions tax that would be of significant benefit as if the site is gifted to ye both, the Group 3 treshold would come into play for your spouse (sorry just reread your post and am not sure if ye are married) and quite a significant CAT liability could arise.

By holding onto the house in your name for 3 years, you will then be able to put your spouse on the deed as gifts between spouses are exempt from CGT and CAT. The 3 years is to avoid the clawback on the CGT relief your father would have claimed and this clawback would be payable by you.

Lemlin

Legend100 wrote: »

If your dad gifts you the site and its market value is less than 500k, then it is exempt from CGT if it is for the purpose of bulding a dwelling house for use as your PPR. You will also have the group 1 threshold for capital acquisitions tax that would be of significant benefit as if the site is gifted to ye both, the Group 3 treshold would come into play for your spouse (sorry just reread your post and am not sure if ye are married) and quite a significant CAT liability could arise.

By holding onto the house in your name for 3 years, you will then be able to put your spouse on the deed as gifts between spouses are exempt from CGT and CAT. The 3 years is to avoid the clawback on the CGT relief your father would have claimed and this clawback would be payable by you.

So unless we have the site in just my name we'll get hit for tax? The value of the site is about 80k.

We aren't married yet.

Legend100

if the site is jointly held, your partner and your father will get hit as your dad will be liable for CGT on the disposal at deemed market value. if you decided to go this route, there is a relief available called the same event credit for CGT/CAT purposes against your partner's CAT liability but you are better off seeking professional advice to determine your best course of action

Lemlin

Legend100 wrote: »

if the site is jointly held, your partner and your father will get hit as your dad will be liable for CGT on the disposal at deemed market value. if you decided to go this route, there is a relief available called the same event credit for CGT/CAT purposes against your partner's CAT liability but you are better off seeking professional advice to determine your best course of action

I think we'll just leave the site and house in my name for the three year period.

Thanks for your help though.

Legend100

just remember that the exemption for CAT only applies to married individuals. As ye are not married, the 3 year rule would not come into play for CAT purposes and with the thresholds at what they are at the moment, your partner would be liable for gift tax if ye were not married (ie he/she is receiving a gift from YOU by being put on the deed thereby receiving a stake in the value of the site) and that relationship is group 3

Lemlin

Legend100 wrote: »

just remember that the exemption for CAT only applies to married individuals. As ye are not married, the 3 year rule would not come into play for CAT purposes and with the thresholds at what they are at the moment, your partner would be liable for gift tax if ye were not married (ie he/she is receiving a gift from YOU by being put on the deed thereby receiving a stake in the value of the site) and that relationship is group 3

So it'd have to wait until 3 years after we get married? Am I correct?

Legend100

no sorry i didnt explain it very well.

you cant gift your partner the half of the site until 3 years after you received it from your dad because the clawback of your dad's CGT relief would be liable on you.

if you got married in the meantime, you could then gift your spouse the deed 3 years after receiving the gift from you dad. (ie you dont have to wait three years from when you get married)

The point i was making is that if you wait the three yrs (or any amount of time) and were NOT married, your partner would be liable for gift tax as you would not have the inter-spouse exemption for CAT

Lemlin

Legend100 wrote: »

no sorry i didnt explain it very well.

you cant gift your partner the half of the site until 3 years after you received it from your dad because the clawback of your dad's CGT relief would be liable on you.

if you got married in the meantime, you could then gift your spouse the deed 3 years after receiving the gift from you dad. (ie you dont have to wait three years from when you get married)

The point i was making is that if you wait the three yrs (or any amount of time) and were NOT married, your partner would be liable for gift tax as you would not have the inter-spouse exemption for CAT

I'm confused here. Am I right then in thinking that I can marry my partner anytime and we can change the deeds anytime 3 years after my father gave me the site?

So, if he gives me the site next month, we can marry anytime and we can change the deeds into both our names anytime after September 2012?

Legend100

Lemlin wrote: »

So, if he gives me the site next month, we can marry anytime and we can change the deeds into both our names anytime after September 2012?

Yes thats it in a nutshell and you will avail of all the reliefs for tax purposes. There may be stamp payable alright but best talk to a solicitor/professional advisor on that

just a side note-area of the land must not exceed 1 acre exclusive of the area on which the house is to be built (im assuming it is not if it is for 80k)

Lemlin

Legend100 wrote: »

Yes thats it in a nutshell and you will avail of all the reliefs for tax purposes. There may be stamp payable alright but best talk to a solicitor/professional advisor on that

just a side note-area of the land must not exceed 1 acre exclusive of the area on which the house is to be built (im assuming it is not if it is for 80k)

Thanks for the info. I'll speak to my solicitor alright. Just want to get a few things ironed out before going to solicitor and the bank had mentioned that we should just put the deeds into my name.

Nope, it wouldn't be more than 1 acre. Thanks again for the info.