For parents gifting a site to a child to build a house there are tax implications for both parties, however with good tax planning taxes can be minimized.
Parent: Capital Gains Tax (CGT)
For the parents gifting the site, the gift will be deemed by Revenue as a disposal of land at current market value and it will be subject to CGT at the current rate of 33%. However if the site gifted is 1 acre or below with a value of €500,000 or less it will be exempt from CGT.
If the site is over 1 acre CGT will be levied on the full market value of the entire site. CGT for transfers made between January 1st and November 30th is payable by December 15th of that year. CGT for transfers made between December 1st and December 31st is payable by January 31st of the following year.
Whether the transfer is exempt from CGT or not a CGT return is required to be filed with Revenue by October 31st of the year following the transfer.
Child: Capital Acquisitions Tax (CAT) / Stamp Duty
For the child receiving the site the gift falls under Capital Acquisitions Tax (CAT) with a current rate of 33%. However a child has a lifetime tax free threshold of €335,000 on gifts and inheritances. Prior gifts and inheritances are aggregated for the threshold. A CAT return is required to be filed when aggregate gifts and inheritances exceed 80% of the lifetime threshold.
The child must pay 7.5% Stamp Duty on the market value of the site. However 11/15ths of this can be relieved provided certain conditions are met.
For more details contact Dave on 091 586020 or dave@dvmannion.ie