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Capital Gains and Options

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  • 17-12-2022 11:51am
    #1
    ConorC1888
    Registered Users Posts: 4 ✭


    Hi,

    Retired farmer with agri land. Not great quality so say 10 acres valued at €40,000

    A developer wants an option to lease the land. The option will pay €5k a year for 10 years.

    The lease is for €20k a year (it's to access other land, complicated so won't go into it here). 15 year lease

    My understanding is that the option income will be subject to income tax, fair enough.

    However I am told once the option is exercise there is capital gains tax as the value of the land has increased.

    So say the value of the land has increased from €40k to €150k due to the lease. Is capital gains tax due on the difference? How is the uplift in value calculated? What if the lease is broken after a year? Is a CGT refund issued?Is income tax also paid on the rental income?

    Any thoughts or guidance appreciated.

    Tks



Comments

  • Options
    #2
    ConorC1888
    Registered Users Posts: 4 ✭ConorC1888


    No one know about this?



  • Options
    #3
    whomitconcerns
    Registered Users Posts: 4,329 ✭✭✭whomitconcerns


    Your solicitor or tax advisor will know more. Too many variables



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    #4
    Jim_Hodge
    Registered Users Posts: 10,554 ✭✭✭✭Jim_Hodge


    +1. You won't get proper advice here. You need a solicitor/tax advisor to look into all the pertinent factors.



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