A selection of your property queries answered.
Can parents give us site tax-free?
Our parents' house is on a three-acre site in a residential area and they have offered us (three siblings) a portion each to build family homes for free. We are interested in pursuing this offer but are concerned that our parents will be liable for CGT (notional gains) as the value of the land is approx €500,000 per site. Can we enjoy a parent/child inheritance exemption of €450,000 approximately?
Well lucky you to be on the receiving end of such a generous gift! This is a long-winded answer but the whole area and CGT is such a complex one that you and your siblings would be well advised to contact a tax advisor before you do anything. According to the Revenue, a transfer of property is a disposal for capital gains tax (CGT) purposes. Where the transfer is between connected parties, the consideration is deemed to be the market value of the asset. There is an exemption from CGT on gains arising on the transfer of a site by a parent to his or her child, one of the conditions being that the value of the site cannot exceed €254,000. There is a further exemption from CGT on gains made by an individual on the disposal of land occupied as the gardens or grounds of his/her house. The relief applies only up to an area (exclusive of the site of the residence) of one acre and is restricted in the case of a disposal of development land and this seems to apply in your case.
However, the relief will be restricted to the gain arising on the current use value of the sites. As the value of each site exceeds €254,000, the parent to child site exemption doesn't apply in your case. The gain will be computed by reference to the market value and a portion of the original cost of the entire property. The first €1,270 of an individual's annual gains are exempt and the balance are taxable at 20 per cent. The current Capital Acquisitions Tax (CAT) threshold for a child receiving either a gift or an inheritance from parents is €466,725. Once the value exceeds this figure, the excess is liable to CAT at the rate of 20 per cent.
All gifts and inheritances received from parents since December 5, 1991 are taken into account in determining whether the threshold figure of €466,725 has been exceeded. If you have received no prior gifts or inheritances from your parents since December 5, 1991, each of you will pay capital acquisitions tax on €30,275 (i.e., €500,000-€466,725 tax-free threshold - €3,000 the annual small gift allowance) at 20 per cent i.e. each of you will pay €6,055 capital acquisitions tax. Where the same transaction,e.g., a gift, gives rise to both a CGT and CAT charge, the CGT paid may be credited against the CAT payable.
Turning down affordable house
I noticed an advertisement for an affordable housing scheme in your paper two weeks ago. What happens if you are offered a house and it's not suitable? It mentions Ballybrack, Sandyford and Ballinteer. For school reasons, the only one that suits me is Ballinteer.
Different local authorities have slightly different approaches to the administration of the affordable housing schemes. In the case of DúLaoghaire Rathdown (its ad was in the paper) if you refuse two offers of accommodation that the council feels is suitable to your needs you will automatically revert to the bottom of the list.
Send your queries to Property Questions, The Irish Times, 10-16 D'Olier Street, Dublin 2 or e-mail propertyquestions@irish-times.ie.
Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
