Planning and Ownership of site

shamu2new

Looking for a bit of advice on this - Could I allow a relative to build on land I own using their own money not taking out a mortgage - applying for planning in their own name - but not transferring the land into their name to keep costs down.
Then I think the house would be in my ownership as I own the site - as such would be classed as a non Principle Private Residence for me and they could have a right residence in the house - they are ok with this arrangement but I just want to know is it ok legally? Hope this is clear but if not feel free to ask questions - thank you

sydthebeat

shamu2new wrote: »

Looking for a bit of advice on this - Could I allow a relative to build on land I own using their own money not taking out a mortgage - applying for planning in their own name - but not transferring the land into their name to keep costs down.
Then I think the house would be in my ownership as I own the site - as such would be classed as a non Principle Private Residence for me and they could have a right residence in the house - they are ok with this arrangement but I just want to know is it ok legally? Hope this is clear but if not feel free to ask questions - thank you

Your relatives are happy to spend their money on a house that will be registered in your name. ....
That's incredibly naive and dumbfoundingly stupid.

I've heard of lengths people go to to save money in a house build but this takes the biscuit.
How much are they trying to save .... €1.5k roughly? ??

4Sticks

If anyone else applies for permission on your land that person will need a letter from you stating that you are happy for them to do so. That letter must be included in the planning application set of documents.

Wish I had relatives like yours too by the way!

JimmyMW

Hi shamu2new,

I presume that you are essentially giving your relatives the site and if you were to sell it to them you would have to have a realistic valuation on the site, therefore they would either have to give you the money for the site or alternatively they would end up paying Inheritance/Gift tax on the site if you gifted it to them? This tax will vary depending on how you are related to them, there is different bands on lets say sibling to sibling as opposed to parent to sibling etc.

However there is another option, I am sure you can sell them the site as a leasehold, (which can be much less) so you will still own the land and they will own the house on the land. Basically ye will have a legal agreement which will entitle them to rent the land from you for x number of years ie 200 years at an aggreed rate ie €1 per annum. That is how it works as far as I know anyway, but the biggest problem is, if down the line you sell all of your land the new owner will have to be signed into this lease or if they have to sell the house or borrow against it, the valuation of the house will be much less and it could be difficult to sell. Also you need to think down the line when these things will get passed on to the next generation, that could cause serious issues and it could be just messy.

If my assumptions above are correct, the best thing to do in my opinion is to gift them the site and they take the hit and pay the tax.

bee06

JimmyMW wrote: »

Hi shamu2new,

I presume that you are essentially giving your relatives the site and if you were to sell it to them you would have to have a realistic valuation on the site, therefore they would either have to give you the money for the site or alternatively they would end up paying Inheritance/Gift tax on the site if you gifted it to them? This tax will vary depending on how you are related to them, there is different bands on lets say sibling to sibling as opposed to parent to sibling etc.

However there is another option, I am sure you can sell them the site as a leasehold, (which can be much less) so you will still own the land and they will own the house on the land. Basically ye will have a legal agreement which will entitle them to rent the land from you for x number of years ie 200 years at an aggreed rate ie €1 per annum. That is how it works as far as I know anyway, but the biggest problem is, if down the line you sell all of your land the new owner will have to be signed into this lease or if they have to sell the house or borrow against it, the valuation of the house will be much less and it could be difficult to sell. Also you need to think down the line when these things will get passed on to the next generation, that could cause serious issues and it could be just messy.

If my assumptions above are correct, the best thing to do in my opinion is to gift them the site and they take the hit and pay the tax.

OP would also have to pay capital gains tax if he gifted them the site unless it's a parent to child transfer and that could be a fair chunk of money as well.

JimmyMW

Hi bee06

I am open to correction here but I think it is either Inheritance/Gift tax or Capital Gains tax, otherwise you would be taxed twice on the same gain. Inheritance/Gift tax applies to more situations that just Parent to Child tranfers see link below
http://www.revenue.ie/en/tax/cat/thresholds.html
I might be picking up what your saying incorrectly, if so please expand on what your saying. Thanks.

bee06

JimmyMW wrote: »

Hi bee06

I am open to correction here but I think it is either Inheritance/Gift tax or Capital Gains tax, otherwise you would be taxed twice on the same gain. Inheritance/Gift tax applies to more situations that just Parent to Child tranfers see link below
http://www.revenue.ie/en/tax/cat/thresholds.html
I might be picking up what your saying incorrectly, if so please expand on what your saying. Thanks.

I'm not a tax expert by any means but here is my understanding based on the research I did when dealing with a site transfer

CGT: payable by the person disposing of the land. There is an exemption for a transfer from parent to child.

CAT: payable by the person receiving the land and there are various reliefs depending on the relationship. Paid CGT can also be used to offset CAT but I've never seen mention on the revenue website of the opposite being possible.

JimmyMW

bee06 wrote: »

I'm not a tax expert by any means but here is my understanding based on the research I did when dealing with a site transfer

CGT: payable by the person disposing of the land. There is an exemption for a transfer from parent to child.

CAT: payable by the person receiving the land and there are various reliefs depending on the relationship. Paid CGT can also be used to offset CAT but I've never seen mention on the revenue website of the opposite being possible.

My apologies, I understand what your saying, yes I believe your right. It's amazing that they can essentially tax you on a financial loss, madness, it's no wonder the construction industry has remained on its knees for so long.

shamu2new

thanks for all the replies so far I need to digest all that info am working next three days but will be back

Basically My Uncle needs somewhere to Live has to sell up and move for health reasons so will then have money to build current house worth very little. I am sole beneficiary in his will (not a lot) when he passes so would have gotten his current house eventually anyway hence he has no problem with it being in my name when he is alive and hopefully will be for many more years.
He doesn't comply with the strict local needs planning despite living within 1.5 miles of site for over 40 years - areas used to be a rural village now its town centre and rule is he has to live/work in Rural for Last 10 years in area Currently zoned rural - sometimes rules are a bit crazy. So if I apply for planning he finances it and lives in it - I think that means it will be registered in my name as the land is in my name - it will be a second principle private residence for me and im happy to cover the costs and taxes associated with that. I don't want money for site from him but don't have money myself to pay CGT which would be due if I gifted land or to transfer site into his name as neither of us have the money to finance the taxes for that. I have space he needs somewhere Im just trying to find a legal way to work this out properly.

TaraGreene

i would advice to get a lawyer, not sure if this is legal or not but anyways you shouldn't go for it only on verbal agreement with your relatives, i have heard of similar stories going terribly wrong, i do hope this is not the case, and the lawyer can advise you on your question as well

shamu2new

Many thanks for all the replies on this - I have decided to engage a solicitor to get advice on this as it is quite complicated - I am also going to get an appointment with a tax consultant - it looks a lot more complex then I initially thought.

ole ole

How did this fare out sham?