Tax issues with sharing a gift of land from my brother with siblings

Questions & Answers: Dominic Coyle

The value of a gift will be determined by its worth when you receive it, not when you sell it

The value of a gift will be determined by its worth when you receive it, not when you sell it

 

My brother is putting a small piece of land in the names of my five siblings and me. I don’t know how much it is worth but, for easy calculation, I would guess €60,000 would be the max and therefore he would be gifting us each €10,000, which is well short of the €30,000 a brother can give to a sibling. I wouldn’t expect to receive any other gift from him.

So going on your reply a few weeks ago, I feel that I wouldn’t have to notify Revenue of this gift yet as I haven’t reached 80 per cent of the €30,000 but when my brother is putting it into my name would they expect it to be valued so that I can be sure of that or is it okay that it only becomes an issue if we ever decide to sell the land?

Ms B.O’C., email

Well, you’re certainly correct that you won’t need to contact Revenue as the likely value of the land is nowhere near 80 per cent of the Category B threshold which applies to gifts and inheritances between siblings. As you say, that threshold currently stands at €30,150 – a figure that has not changed since the end of 2012 when it was reduced to that level.

There is some pressure to increase the inheritance and gift tax threshold so you should keep an eye on that in next month’s budget.

I would certainly advise your brother to get a proper valuation on the land in question – possibly, for fairness, to be paid for by the six of you equally. The value of the gift will be determined by its worth when you receive it not when you sell it. At that later stage any selling price is relevant in the context of a separate tax, capital gains tax on the gain you make between the time it is put into your name and the time it is sold.

Your portion of the value of the land on receipt will be set against a lifetime capital acquisition tax limit on gifts and inheritances from all siblings and other “linear relations” such as aunts, uncles and grandparents, so the €30,150 does not relate solely to what you receive from this brother.

Assuming it is worth €10,000 to you, remember that the first €3,000 counts under the small gift exemption, so only €7,000 has to be carried forward against your lifetime CAT Category B threshold.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice

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