Calculating CGT on disposal of land ( voluntary to offspring) where lands acquired'73

Given my mathematical/taxation inadequacies.........can anyone help?

Client acquires land from relative in 1973 ( about 11 acres poor quality scrubland) - it seems to have been stamped at £39.00 ( related parties) - so I think the approx. value might have been about £4000.00. (Any comments on these figures much appreciated!)

Now wishes to dispose of lands to offspring ( 2 of them)- entirely - does not want to have the responsibility of looking after them and while the one acre site idea is a thought, it would still leave him with land so does look as if he will pass over the 11 acres. He accepts that, perhaps, leaving it in the will might make more sense – no CGT and CAT unlikely because of values.

Value is now 80K and 60K (i.e. a total of €140K ) so if there were only nominal acquisition costs of (say) £1K, does it look as if CGT on disposal would be in the region of €26K?
Any thoughts appreciated

mf

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

A couple of quick thoughts:

1. Does he qualify for retirement relief?
2. €140k looks a bit toppy for 11 acres poor quality scrubland. If there is no PP for sites, nor any intention to develop, perhaps a lower valuation is possible?
3. Has he considered waiting until death before passing over the land, with no CGT?
4. A more scientific valuation as at 5/4/74 might be worth a try - any veteran auctioneers locally? This should attract full indexation relief presuming no development value in 1974.

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Thanks for that - appreciated.

1. No - not a business
2. Valuation is from one of my own preferred valuers - so doubt that they are at the top end. But will consider that.
3. I've suggested that - particularly as now looking at the CGT!
4. Will consider this - but given that there was a voluntary gift to him which was adjudicated ( and stamped ) I suspect is probably fair. Indexation relief - pardon my ignorance, but was that not abolished?

many thanks

mf

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Looks like a high valuation to me too if it really is scrubland.

AFAIK you can claim the retirement relief if over 55 and have been declaring an income from the land for more than 10 years?

Indexation is still allowed up to 2004 I think ( so you still index).

A notional value taken in 74 as Ubi suggest might help.


I don't do CGT for clients but insist they go to their accountant or tax adviser.

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Multiplier of 6.582 is available from 1974 so I calc CGT below as follows. Hope I'm not to far off.

Can he gift the land to them? As the recipiants are within the treshholds no tax will be payable ?


Disposal Value /Selling Price ....................................................140,000.00
Purchase Price ..........................................4,000.00
Stamp Duty ...................................................39.00
Expenses ..................................................1,000.00
Total Purchase Expenses .........................5,039.00
Indexation Relief ...........................................6.582
Purchase Price After Indexation Relief .......33,166.70
Euro Value ..............................................42,113.02....................42,113.02
.................................................................................................97,886.98
Less annual Relief .......................................................................1,260.00
Liable to CGT ............................................................................96,626.98
CGT .........................................................................................19,325.40

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Re the Retirement Relief issue. If aged 55 and owned asset for 10 yrs + the disposal would be exempt from CGT but condts to be met
1. Age
2. Must be disposal of whole/part of a farm /business within the family

Re Indexation, even though abolished can definately use the multiplers up to either '03/'04..i think this would be afforded the hight multipler - region of 7.5

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Vanilla said:

I don't do CGT for clients but insist they go to their accountant or tax adviser.

Click to expand...

A very wise policy imho.

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

Doesn't retirement relief only apply to 'farmers'? As far as I'm aware, it is not enough to own land, you have to actively farm and be 'recognised' as a farmer (presumably be in receipt of some sort of payout!).

Re: Calculating CGT on disposal of land ( voluntary to offspring) where lands acquire

yoganmahew said:

Doesn't retirement relief only apply to 'farmers'? As far as I'm aware, it is not enough to own land, you have to actively farm and be 'recognised' as a farmer (presumably be in receipt of some sort of payout!).

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There is no requirement in the retirement relief legislation to be formally 'recognised' as a farmer although the existence of a herd number would help greatly in assessing eligibility.