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Transfer of Land

  • 06-04-2021 10:07am
    #1
    Registered Users Posts: 7 MattSkiba


    Hi All,

    Hoping for advice.

    My fiance and I are looking at building on a side garden of her parents house. It will be a few years before we build as we are in the process of saving. We need to transfer the land over to her, with this there are implications for Tax. Without planning the land is worth 10k, subject to planning it's worth 150k and with planning it's worth 180k.

    My question is, can we transfer the land @10k value and build in a few years? How do you think the revenue would deem it should they come looking?

    Regards

    MattSkiba
    Tagged:


«1

Comments

  • Registered Users Posts: 2,175 ✭✭✭ ECO_Mental


    MattSkiba wrote: »
    Hi All,

    Hoping for advice.

    My fiance and I are looking at building on a side garden of her parents house. It will be a few years before we build as we are in the process of saving. We need to transfer the land over to her, with this there are implications for Tax. Without planning the land is worth 10k, subject to planning it's worth 150k and with planning it's worth 180k.

    My question is, can we transfer the land @10k value and build in a few years? How do you think the revenue would deem it should they come looking?

    Regards

    MattSkiba


    Get it done before you get planning obviously, but you will have to get a valuation on it from an auctioneer. I got my site transferred from my parents before I got planning but it was agricultural land in a zoned green belt so the valuation was fairly straight forward. Yours is next to an existing house so it might be worth more. What ever you do make sure you pay all the due taxes and fees for the transfer (stamp duty etc) as these will be looked for down the line.


  • Registered Users Posts: 7 MattSkiba


    We got the valuation from the auctioneer, the value is 10k without any type of planning (i.e cabbage patch). I'm just worried if it's transferred as a cabbage patch and then we build a few years later the revenue might come looking saying this is tax avoidance.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    MattSkiba wrote: »
    We got the valuation from the auctioneer, the value is 10k without any type of planning (i.e cabbage patch). I'm just worried if it's transferred as a cabbage patch and then we build a few years later the revenue might come looking saying this is tax avoidance.

    Can't see how revenue ( I know they are all powerful etc) could do much. If you wait until the site is in your name for about 5 years then you should have an easier time getting permission.. You are then planning to build on your own land.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    Can't see how revenue ( I know they are all powerful etc) could do much. If you wait until the site is in your name for about 5 years then you should have an easier time getting permission.. You are then planning to build on your own land.

    One other thing, the " cabbage patch " that you are getting transferred needs to be a minimum 0.5 acre if you intend to build on it.


  • Moderators, Regional North West Moderators Posts: 43,376 Mod ✭✭✭✭ muffler


    One other thing, the " cabbage patch " that you are getting transferred needs to be a minimum 0.5 acre if you intend to build on it.
    How do you know it's not in an urban setting?


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  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    In my experience any problems he encounters are more likely to be with the council planning section than with revenue. They are a complete law unto themselves and as far as I can see not accountable to anyone.


  • Moderators, Regional North West Moderators Posts: 43,376 Mod ✭✭✭✭ muffler


    MattSkiba wrote: »
    We got the valuation from the auctioneer, the value is 10k without any type of planning (i.e cabbage patch). I'm just worried if it's transferred as a cabbage patch and then we build a few years later the revenue might come looking saying this is tax avoidance.
    I dont know the answer to your query so the best advice I can offer is to contact a tax consultant.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    muffler wrote: »
    I dont know the answer to your query so the best advice I can offer is to contact a tax consultant.

    His solicitor should know all that. He's going to need one anyway so why fork out to some other guy.


  • Registered Users Posts: 372 ✭✭ JD1763


    We went through a similar process with a transfer of a site in a rural area and had to get:

    1) A survey setting out the boundaries of the site and maps drawn up for the land registry. This would also be the ideal time to organise rights of way (if any) that may be needed through the parents land or if there is a shared entrance or access for utilities needed and have those marked up by surveyor on the maps. When your solicitor is lodging the new site in your name with the land registry they can also register the rights of way saving time down the line.
    2) Valuation by the auctioneer that will form the basis for assessing any taxes that might be owed. This is the valuation as of the point in time of the transfer not the potential future value. For our transfer the site was under the thresholds for CGT and was valued at the going rate of agricultural land in the area as it was in effect only a field at that stage and not a site with planning. So we only had to pay stamp duty. More information is at https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/transfer-of-a-site-from-a-parent-to-a-child.aspx.

    Our solicitor took care of everything - we didn't need a tax consultant.

    Your biggest issue won't be revenue it will be the planners. So before going through this process you should try and have a pre-planning meeting to better assess your chances of getting planning on the land.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    JD1763 wrote: »
    We went through a similar process with a transfer of a site in a rural area and had to get:

    1) A survey setting out the boundaries of the site and maps drawn up for the land registry. This would also be the ideal time to organise rights of way (if any) that may be needed through the parents land or if there is a shared entrance or access for utilities needed and have those marked up by surveyor on the maps. When your solicitor is lodging the new site in your name with the land registry they can also register the rights of way saving time down the line.
    2) Valuation by the auctioneer that will form the basis for assessing any taxes that might be owed. This is the valuation as of the point in time of the transfer not the potential future value. For our transfer the site was under the thresholds for CGT and was valued at the going rate of agricultural land in the area as it was in effect only a field at that stage and not a site with planning. So we only had to pay stamp duty. More information is at https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/transfer-of-a-site-from-a-parent-to-a-child.aspx.

    Our solicitor took care of everything - we didn't need a tax consultant.

    Your biggest issue won't be revenue it will be the planners. So before going through this process you should try and have a pre-planning meeting to better assess your chances of getting planning on the land.

    He says the land is valued at 10k. I would imagine that comes under the CGT threshold?


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  • Registered Users Posts: 372 ✭✭ JD1763


    The value is the not the only CGT test for the parents, other requirements must also be met:

    Transfer of a site from a parent to a child
    You will not have to pay CGT if you transfer land to your child to build a house on. The house must be your child’s only or main residence. A transfer includes a joint transfer by you, and your spouse or civil partner, to your child.

    The term 'child' includes your:

    son or daughter
    stepchild
    civil partner's child
    fostered child, whom you maintained for at least five years before they reached the age of 18. (This must be supported by the testimony of more than one witness.)
    How do you qualify for the relief?
    To qualify for relief, the land must:

    be one acre or less
    have a value of €500,000 or less.

    In terms of CAT for you as recipient of the land, the thresholds are:

    Capital Acquisitions Tax (CAT) : the child receiving the site should generally not be liable to pay Capital Acquisition Tax but this will depend on the value of the site at the date of the transfer. Capital Acquisition Tax may arise when a person receives a gift of a site that exceeds a given threshold. A threshold is the amount a child is allowed to receive as a gift from a parent without having to pay tax.

    A child’s threshold when receiving a gift from a parent is currently at €335,000. If the value of the site is above €335,000 the child would be liable to pay CAT at a rate of 33%. Previous gifts received would also be taken into account.


  • Registered Users Posts: 102 ✭✭ Duberlin Chick


    Myself and partner did this 2 years ago. Site valued at 30k prior to planning permission being granted. Liable for stamp duty on the transfer to my hubby from his parents. Paid €2.2k in stamp duty. Need a map with the site outlined, valuation and solicitor can do all for you online with Revenue.


  • Registered Users Posts: 21,783 ✭✭✭✭ mickdw


    Would your parents sell the plot on the open market for 10k?
    They would not because it has development potential.
    I think valuing it at anything less than what it is worth with development potential is asking for trouble.
    You and your parents certainly need tax advice here.


  • Registered Users Posts: 102 ✭✭ Duberlin Chick


    Well it’ll all depend on what value the Valuer puts on it? Not what they think.
    mickdw wrote: »
    Would your parents sell the plot on the open market for 10k?
    They would not because it has development potential.
    I think valuing it at anything less than what it is worth with development potential is asking for trouble.
    You and your parents certainly need tax advice here.


  • Registered Users Posts: 372 ✭✭ JD1763


    mickdw wrote: »
    Would your parents sell the plot on the open market for 10k?
    They would not because it has development potential.
    I think valuing it at anything less than what it is worth with development potential is asking for trouble.
    You and your parents certainly need tax advice here.

    They have an independent valuation of 10k - that's all that is required.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    mickdw wrote: »
    Would your parents sell the plot on the open market for 10k?
    They would not because it has development potential.
    I think valuing it at anything less than what it is worth with development potential is asking for trouble.
    You and your parents certainly need tax advice here.

    Imo the only advice he needs is from a solicitor. Tax advisors, financial advisors etc are just that, advisors, and not worth Jack if a problem arises.


  • Registered Users Posts: 21,783 ✭✭✭✭ mickdw


    Valuations can be looked at by revenue. Even apart from that, tax advice is needed.


  • Registered Users Posts: 6,601 ✭✭✭ realdanbreen


    mickdw wrote: »
    Valuations can be looked at by revenue. Even apart from that, tax advice is needed.

    IMO the only professional service you should ever use is one that is at least 500 years old. Be that a banker, solicitor or prostitute. All other 'professionals ' are merely hangers on and completely unnecessary whether that be tax advisors, financial advisors, insurance advisors etc.


  • Registered Users Posts: 7 MattSkiba


    Thanks for the replies. I guess I'm thinking if they transfer it to us as a grass patch now it's worth 10k. The revenue don't know we want to build on it, at what point can we decide we want to turn that grass patch into land for a house. Where is it written that the grass patch can't be built on for X amount of years, if it is then you need to pay the larger amount.

    We consulted a solicitor and they told us that we should transfer it subject to being built because thats what we told them we were doing with it, I disagree. I mean if did build on it, what would the repercussions be, pay what would have been owed?


  • Moderators, Regional North West Moderators Posts: 43,376 Mod ✭✭✭✭ muffler


    MattSkiba wrote: »
    Thanks for the replies. I guess I'm thinking if they transfer it to us as a grass patch now it's worth 10k. The revenue don't know we want to build on it, at what point can we decide we want to turn that grass patch into land for a house. Where is it written that the grass patch can't be built on for X amount of years, if it is then you need to pay the larger amount.

    We consulted a solicitor and they told us that we should transfer it subject to being built because thats what we told them we were doing with it, I disagree. I mean if did build on it, what would the repercussions be, pay what would have been owed?
    So many questions that the layman (most who posted here are that) cant answer. I'll repeat my previous message .. talk to a tax consultant. They are the people who specialize in this area.


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  • Registered Users Posts: 3 Adoni


    JD1763 wrote: »
    The value is the not the only CGT test for the parents, other requirements must also be met:

    Transfer of a site from a parent to a child
    You will not have to pay CGT if you transfer land to your child to build a house on. The house must be your child’s only or main residence. A transfer includes a joint transfer by you, and your spouse or civil partner, to your child.

    The term 'child' includes your:

    son or daughter
    stepchild
    civil partner's child
    fostered child, whom you maintained for at least five years before they reached the age of 18. (This must be supported by the testimony of more than one witness.)
    How do you qualify for the relief?
    To qualify for relief, the land must:

    be one acre or less
    have a value of €500,000 or less.

    In terms of CAT for you as recipient of the land, the thresholds are:

    Capital Acquisitions Tax (CAT) : the child receiving the site should generally not be liable to pay Capital Acquisition Tax but this will depend on the value of the site at the date of the transfer. Capital Acquisition Tax may arise when a person receives a gift of a site that exceeds a given threshold. A threshold is the amount a child is allowed to receive as a gift from a parent without having to pay tax.

    A child’s threshold when receiving a gift from a parent is currently at €335,000. If the value of the site is above €335,000 the child would be liable to pay CAT at a rate of 33%. Previous gifts received would also be taken into account.

    So as to avoid starting a new thread i hope its ok that i tag on to the end of this one looking for advice. Similarly to the OP, myself and partner are looking to start building on my family's land. Unlike the OP we hope to start the process very soon (next few months), but my question is: is it best to apply for planning permission with the consent of the landowner (my parents) or should i have the land signed over to us before we put in for planning permission?? Financially what do people think is the best option or what's your own experiences. We haven't had it valued or anything but we would keep it under the 1 acre threshold, its agricultural land. We are at the very early stages of self build with zero experience so TIA for any and all advice.


  • Registered Users Posts: 10,926 ✭✭✭✭ Calahonda52


    MattSkiba wrote: »
    Hi All,

    Hoping for advice.

    My fiance and I are looking at building on a side garden of her parents house. It will be a few years before we build as we are in the process of saving. We need to transfer the land over to her, with this there are implications for Tax. Without planning the land is worth 10k, subject to planning it's worth 150k and with planning it's worth 180k.

    My question is, can we transfer the land @10k value and build in a few years? How do you think the revenue would deem it should they come looking?

    Regards

    MattSkiba

    Is this plot part of the site on which the parents house was built?
    Is the site urban or rural?


  • Registered Users Posts: 1,511 ✭✭✭ Exactly


    Adoni wrote: »
    So as to avoid starting a new thread i hope its ok that i tag on to the end of this one looking for advice. Similarly to the OP, myself and partner are looking to start building on my family's land. Unlike the OP we hope to start the process very soon (next few months), but my question is: is it best to apply for planning permission with the consent of the landowner (my parents) or should i have the land signed over to us before we put in for planning permission?? Financially what do people think is the best option or what's your own experiences. We haven't had it valued or anything but we would keep it under the 1 acre threshold, its agricultural land. We are at the very early stages of self build with zero experience so TIA for any and all advice.

    Apply for planning permission with a letter of consent from the owner. If successful you will be granted outline planning permission and have to wait 4 weeks to get full planning permission. This is the time to do the transfer of land where you know you have planning but it isn't official yet.


  • Moderators, Regional North West Moderators Posts: 43,376 Mod ✭✭✭✭ muffler


    Exactly wrote: »
    Apply for planning permission with a letter of consent from the owner. If successful you will be granted outline planning permission and have to wait 4 weeks to get full planning permission. This is the time to do the transfer of land where you know you have planning but it isn't official yet.
    You need to brush up on your knowledge of how the planning system works.


  • Registered Users Posts: 1,511 ✭✭✭ Exactly


    muffler wrote: »
    You need to brush up on your knowledge of how the planning system works.

    Care to enlighten me?


  • Moderators, Regional North West Moderators Posts: 43,376 Mod ✭✭✭✭ muffler


    Exactly wrote: »
    Care to enlighten me?
    If you have the money, I have the time :)


  • Registered Users Posts: 1,511 ✭✭✭ Exactly


    muffler wrote: »
    If you have the money, I have the time :)

    Well maybe you'd answer the OP then as to the best course of action if I'm wrong rather than sitting on your high horse.


  • Registered Users Posts: 21,783 ✭✭✭✭ mickdw


    Exactly wrote: »
    Apply for planning permission with a letter of consent from the owner. If successful you will be granted outline planning permission and have to wait 4 weeks to get full planning permission. This is the time to do the transfer of land where you know you have planning but it isn't official yet.

    Outline planning and full planning are two distinct things and one does not follow the other.
    You refer to 'decision to grant' and 'final grant'.
    I wouldnt follow your advice though.
    They are basically telling revenue - i know nothing about planning or site value - yet have applied and got a favourable decision already in the bag.


  • Registered Users Posts: 1,511 ✭✭✭ Exactly


    mickdw wrote: »
    Outline planning and full planning are two distinct things and one does not follow the other.
    You refer to 'decision to grant' and 'final grant'.
    I wouldnt follow your advise though.

    What way would you go about it? You are correct in my use of terminology. I meant what you refer to above. When is the best time to transfer?


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  • Registered Users Posts: 21,783 ✭✭✭✭ mickdw


    Exactly wrote: »
    What way would you go about it? You are correct in my use of terminology. I meant what you refer to above. When is the best time to transfer?

    I would do as you say re permission letter from owner only to save the hassle of taking ownership of a useless site. Once planning granted, id do the transfer based on site value.


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