Parents who wish to transfer a site to their child can do so without triggering a charge to capital gains tax (CGT), says Ned Gladney, as long as the relevant conditions are met. The market value of the property must not exceed €254,000, and the aim of the transfer must be to enable the child to build a house on the site.
One caveat is that the relief will be clawed back if the child sells the land and a house has not been built on it, or if a house has been built but the child has not lived in it for a period of at least three years. Interestingly it is the child, and not the parent, who becomes liable for any CGT liability which becomes due in such a situation.
According to Gladney, this CGT exemption was introduced mainly with farming families in mind. "This is very much a rural issue," he says. "For example, if you had a farmer who gets planning permission on a site and then transfers it to his child, without this exemption he could be faced with a considerable CGT charge."
Gladney also draws attention to the exemption from Capital Acquisitions Tax (CAT) available to a child who is gifted a residence by a parent. Gladney outlines the main conditions which apply: "The child has to have lived there for three years before the transfer and must continue to live there for a further six years."
Whether transfering a site or a residence, it is important to seek professional advice. "There are legal issues involved as well as tax, so at a minimum consult a solicitor."
