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Undervaluing A Site

  • 27-04-2025 06:18AM
    #1
    TheClubMan
    Registered Users, Registered Users 2 Posts: 279 ✭✭


    Scenario:

    Jane has been granted planning permission to build her primary residence on a 1.5 acre site gifted to her by her mother. As the site being gifted is over the 1 acre limit parent to child exemption, will Jane's mother have to pay Capital Gains Tax on the full 1.5 acres or just .5 acres of the site?

    Also, the site has full planning permission, in a scenic, high demand area near a small town, good road infrastructure, within an hour from Dublin. An auctioneer put a figure of €65K on the site (undervalued) so Jane can avail of the first home scheme. If the site is transferred to Jane from her mother at the undervalued sum of €65K, what are the penalties for undervaluing the site upon transfer and which parties are liable?

    Post edited by TheClubMan on


Comments

  • #2
    Calahonda52
    Registered Users, Registered Users 2 Posts: 13,325 ✭✭✭✭Calahonda52


    Might run better in taxation

    Who is Sarah?

    mother to daughter at 355 for CAT should not be an issue for Jane.

    How real is the risk of the breach of the first home scheme being picked up and possibly cancelled.

    From Jane's perspective , 1.5 means that the 0.5 could be assessed as development land for the PPR CGT exemption

    “I can’t pay my staff or mortgage with instagram likes”.



  • #3
    TheClubMan
    Registered Users, Registered Users 2 Posts: 279 ✭✭TheClubMan


    Apologies, I meant 'Jane'.

    I forgot to mention that the site is part of an 80 acre farm that was inherited in the late 80's.

    Will the CGT be higher for Jane's mother in that case?



  • #4
    Calahonda52
    Registered Users, Registered Users 2 Posts: 13,325 ✭✭✭✭Calahonda52


    see example 2 here

    https://www.revenue.ie/en/property/stamp-duty/property/stamp-duty-property/residential-property.aspx

    In passing how does site value effect the scheme: is it that build cost plus site >65 will exceed the Co Co limit

    “I can’t pay my staff or mortgage with instagram likes”.



  • #5
    893bet
    Registered Users, Registered Users 2 Posts: 9,730 ✭✭✭893bet


    What is the 1 acre exemption and how does it apply here?


    Surely the value just a comes off the lifetime allowance?



  • #6
    TheClubMan
    Registered Users, Registered Users 2 Posts: 279 ✭✭TheClubMan


    I was told that those who wish to avail of the first home scheme to build their house, must have the price limit for building fall under €475,000 and that it includes both the site and house. So, €475,000 minus the price of the site (€65,000) leaves €410,000 for building the house in this scenario. That's my understanding but maybe I'm wrong.



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  • #7
    TheClubMan
    Registered Users, Registered Users 2 Posts: 279 ✭✭TheClubMan


    A parent will not have to pay Capital Gains Tax if they transfer land to a child for them to build a house on.That is provided the house to be built is the child's primary residence and the site is 1 acre or less in size.

    What I'm trying to figure out is what happens when the area of the site goes over 1 acre in size. Does the exemption default in this scenario or can it be applied to 1 acre and CGT paid on the 0.5 acres?

    I can't find a definite answer.



  • #8
    Raichų
    Registered Users, Registered Users 2 Posts: 1,190 ✭✭✭Raichų


    https://www.boards.ie/discussion/comment/123393823#Comment_123393823

    why don’t you ask revenue in the morning to be 100pc?



  • #9
    standardg60
    Registered Users, Registered Users 2 Posts: 5,510 ✭✭✭standardg60


    https://www.boards.ie/discussion/comment/123393823#Comment_123393823

    The exemption is lost entirely if over 1 acre so CGT on the lot.



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