CGT on sale of land

[samfarrell]

my parents have sold land for about €2m
they want to divide the sale proceeds amongst the family so each member should receive around 500k each
could anyone tell me what tax implications this would have for each member, i understand inheritance tax there is an amount which would be tax free ?

 

[Nige]

The tax free amount you can receive from your parents is €496,824. You can also get €3,000 each year from every person giving you a gift, so taking €6,000 as your small gift exemption from your parents (3k x 2) and your lifetime threshold, you should be able to get 500k tax free. If you go about the tax free amount, the tax is payable at 20%.

 

[samfarrell]

ok so you are saying that everyone can receive 496824 tax free. and every euro over that is 20%. so my parents wont be liable for 20% on €2m if they give the money to the family members, assuming each does not receive over the tax free amount?
thanks

 

[ubiquitous]

There will probably be a Capital Gains Tax liability on the sale of the land as well as a Gift Tax liability on the distribution of the funds. Get professional advice.

 

[Nige]

ok so you are saying that everyone can receive 496824 tax free. and every euro over that is 20%. so my parents wont be liable for 20% on €2m if they give the money to the family members, assuming each does not receive over the tax free amount?
thanks

No, your parents will be subject to CGT on the sale of the land at 20%.

Gifting some of this money to their children is a complete different matter and is subject to CAT (also at 20%). It is CAT that has the 496k threshold.

 

[z108]

It might be different taxwise if the land had been gifted first and then sold ?

 

[Nige]

It might be different taxwise if the land had been gifted first and then sold ?

Not really.

A transfer to the children will be deemed to be a disposal for capital gains tax purposes, so the parents will have the same CGT liability (unless they can claim retirement relief, but in that case the land would have to be kept by the children for at least six years).