CGT on inherited land

nagsheader

My dad died 10 years ago and left me 50 acres of bogland. I am considering planting or selling it.

Can anyone advise on the CGT liability if I decide to sell?

He bought the land around 30 years ago so it's hard to know what exactly he paid per acre back then.

Thanks in advance

nhg

When you inherited the land at the time of your dad's passing you would have had to get the land valued for probate (I assume this was all done as you said that you inherited this land when your dad died 10yrs ago), you would have paid CGT at that time if the value was above the inheritance threshold at that time so this is the value that would be used should you decide to sell the land....

whelan2

We have an issue here, were when the land was transferred to me the value of it was multiples of what it is now. Has anyone successfully reduced the value? How did you go about it. It is seen as a burden in my accounts , which it really isnt. Accountant has been asked numerous times to look at it

Water John

May not exactly help you Whelan, but I know a few people who were paid for land disruption and had EirGrid lines installed across their land, used the drop in land value because of it, to negate the income of the monies received.
The drop in value or at least, no increase may be to your benefit, in the longer term.

Geuze

So the land has lost value between acquisition at inheritance and sale.

Well then there's no gain.

And if no gain, then no CGT to pay.

FeelTheBern

whelan2 wrote: »

We have an issue here, were when the land was transferred to me the value of it was multiples of what it is now. Has anyone successfully reduced the value? How did you go about it. It is seen as a burden in my accounts , which it really isnt. Accountant has been asked numerous times to look at it

Don't understand what the issue is for you here? Would it not be a good thing for you in the long run as if the value was high when transferred to you, and you still didn't get taxed to bits on it, you will have a high base to work from if you ever sell when calculating any CGT liability then?

whelan2

It shows as a burden/ debt in my accounts. It is an significant amount. It means anytime I go for a loan I need a letter off my accountant to say its not actually a debt. We got alot of advice before doing the transfer

54and56

whelan2 wrote: »

It shows as a burden/ debt in my accounts. It is an significant amount. It means anytime I go for a loan I need a letter off my accountant to say its not actually a debt. We got alot of advice before doing the transfer

Land cannot be a debt/liability on your balance sheet.

Any loan/mortgage you secured on the land or any loan/mortgage you took on from your father at the time of inheritance will show as a debt/liability on your balance sheet.

Do you have a loan secured against the land which is greater in value than the land? If so it would explain why you refer to the land being a debt/liability even though technically the land by itself cannot be a debt/liability.

whelan2

Je_suis_Jean wrote: »

Land cannot be a debt/liability on your balance sheet.

Any loan/mortgage you secured on the land or any loan/mortgage you took on from your father at the time of inheritance will show as a debt/liability on your balance sheet.

Do you have a loan secured against the land which is greater in value than the land? If so it would explain why you refer to the land being a debt/liability even though technically the land by itself cannot be a debt/liability.

Only a small loan secured against it. No where near the value of the land. We want to remove the value of the land from my accounts. Its in as a 7figure sum under bank loans and overdrafts. It was valued at the height of the boom.

nagsheader

So, my CGT depends if the land has increased in value since the will was enacted 10 years ago?

Water John

Provided the CGT was calculated and paid, at that time. That then is your starting value. If not, you need expert sol and acc advice to unwind it.

54and56

whelan2 wrote: »

We want to remove the value of the land from my accounts. Its in as a 7figure sum under bank loans and overdrafts.

Why? Land is an asset. It cannot be a liability. What's listed under bank loans and overdrafts are (and I'm not being a smart arse) bank loans and overdrafts.

Something listed as "Land" under bank loans and overdrafts in a balance sheet would refer to a loan for land. Are you sure you don't have any 7 figure loans for "land"? If not you need to get some answers from your accountant!!

54and56

nagsheader wrote: »

So, my CGT depends if the land has increased in value since the will was enacted 10 years ago?

Correct. The value of the land when you inherited it becomes the base price against which the selling price will be compared to calculate CGT.

paddyte20

50 acres of bog land with a 7 figure value. Must be some bogland!!!

lakill Farm

whelan2 wrote: »

We have an issue here, were when the land was transferred to me the value of it was multiples of what it is now. Has anyone successfully reduced the value? How did you go about it. It is seen as a burden in my accounts , which it really isnt. Accountant has been asked numerous times to look at it

why would you write it down?

read the rest of the thread. the only amount as a current liability should be the loan
the value of the land should be as a fixed asset under land

Fixed asset
Agri Land € 1,000,000

Current Liability
Loan €20,000


Net value €980,000


Example

Good loser

paddyte20 wrote: »

50 acres of bog land with a 7 figure value. Must be some bogland!!!

Different posters.

rangler1

Je_suis_Jean wrote: »

Why? Land is an asset. It cannot be a liability. What's listed under bank loans and overdrafts are (and I'm not being a smart arse) bank loans and overdrafts.

Something listed as "Land" under bank loans and overdrafts in a balance sheet would refer to a loan for land. Are you sure you don't have any 7 figure loans for "land"? If not you need to get some answers from your accountant!!

Sounds very suspiscous....wouldn't look great in a revenue audit

whelan2

rangler1 wrote: »

Sounds very suspiscous....wouldn't look great in a revenue audit

I have had an audit. All was fine.

myshirt

whelan2 wrote: »

I have had an audit. All was fine.

Really?

That you even had an audit is a huge, huge issue.
It is extremely rare to come out unscathed. I mean really extremely. Once it gets to audit stage it is about damage limitation.

What type of accountant is your guy? There is something really strange going on here. You sound like you think you are on top of it, but I don't think you are at all.

whelan2

I meant all was fine with the transfer in the audit. I was given an audit due to some thing else which I paid a fine for.

Toplink

Helping out a friend here so any advice appreciated.

He is a non farmer and is after being gifted some land by a far out relation of his. He is looking at a hefty CGT bill (that he'll struggle to pay as he hasn't been able to work full hours due to an injury).

Anyway, I am wondering if there is a smarter way. This fella is in his mid 40s and I am wondering if he has an option of training as a farmer, getting a herd number and thereby qualifying for agricultural relief and somehow avoiding the full CGT amount.

J.O. Farmer

https://www.boards.ie/discussion/comment/119447123#Comment_119447123

Look into leasing to a trained farmer. I think that may work.

Also ag relief depending on the assets he has he may qualify.

Toplink

https://www.boards.ie/discussion/comment/119447342#Comment_119447342

Thanks J.O.

Just read up on the "farmer test", he owns a house so he wont pass that test.

J.O. Farmer

https://www.boards.ie/discussion/comment/119447418#Comment_119447418

Business relief might be an option, it's the same relief without the farmer test. I don't know if it would work.

A chat with an accountant might be a good idea.

J.O. Farmer

Does he have a mortgage on the house. I don't know if the balance can be deducted from the house value.

Good loser

https://www.boards.ie/discussion/comment/119447123#Comment_119447123

Would think his liability would be for CAT not CGT. The sum due might not be much different. If he was gifted the property in a will I think there would be no CGT. If gifted where donee is alive he (the Donee) would have a CGT liability.

I have a question: if land willed to a nephew and he has helped in the farming for the requisite 7 years to become eligible for low rate CAT. Does this 7 years have to run up to the demise of the donee, or can the land be leased out for some interim years without affecting the rate?