CGT on selling agri land inherited in 97

T

texet

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Hi, would be greatful of any advice? Revenue have sent me a letter saying they want to review my tax liabilities for the year 2003,2008, 2009.

I inherited a house and agri land with no development potential in 97 from my parents valued at £40,000 I received a cert of discharge from CAT then. House was £20,000 ,land was £20,000. I gifted the house to my brother in 2000 .I went on to sell the agri land in 2003 for €30,000 and received another cert of discharge from CAT subject to no conditions. I was not advised of any CGT implication.

Can anyone here give me a rough idea as to whether I have?
 
any guidance on this? will be seeking professional advice but would like to know a bit myself?

thanks
 
General disclaimer- Askaboutmoney is not a professional advice site so take the following pointers with due caution. Tax issues surrounding property can be fraught with many complications- caveat emptor etc etc

My 2-cents:

The 1997 inheritance is probably tax-free on you given the certificate of discharge (I don't have the relevant Capital Acquisitions Tax thresholds for 1997 so am assuming that the Revenue are satisfied that it's a non-taxable event).

Re the gift of the house, the answer regarding Capital Gains Tax [CGT] will depend on whether it was your principal private residence or not. At present, there is also an exemption from Capital Acquisitions Tax [CAT] if your brother lived in the house prior to receiving it (can't remember the required duration) but I don't know when this exemption came into effect, so it might not have applied back in 2000.

Assuming it was not your PPR, the 2000 gift to your brother is technically open to both a CGT charge on you and a CAT charge on your brother. Even though you gifted the house, there could be a CGT liability on the difference between the market value at the date of the gift and the IR£20,000 (as converted to Euros) value at the date of the inheritance. You can increase the IR£20000 by a Revenue provided 'inflation value', thereby reducing the taxable amount. additionally, a small amount (currently €1270 but probably another value back then) is deducted from the gain. Your brother might be chargeable under CAT as he received a gift from a sibling but again, it depends on factors such as whether he had received other gifts from siblings and the total value of all such gifts (including the house) since December 1991.

The sale of the agricultural land shouldn't have any CAT implications for you but there may be a CGT issue. The calculation procedure is as per the CGT calculation on the house.

Another idea worth checking out- lookup or ask about a 'Deed of Family Arrangement' which might allow you to save the CGT on the house transfer to your brother. It's a long shot as I think there may be time limits between the initial acquisition of the house and the subsequent transfer but better to check it out in any event.
 
texet said:
Hi, would be greatful of any advice? Revenue have sent me a letter saying they want to review my tax liabilities for the year 2003,2008, 2009.

I inherited a house and agri land with no development potential in 97 from my parents valued at £40,000 I received a cert of discharge from CAT then. House was £20,000 ,land was £20,000. I gifted the house to my brother in 2000 .I went on to sell the agri land in 2003 for €30,000 and received another cert of discharge from CAT subject to no conditions. I was not advised of any CGT implication.

Can anyone here give me a rough idea as to whether I have?
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for 1997 you could have cat implications but unlikely if you used up your cat threshold from parent to child

for 2000 you disposed of the house was it your ppr ? or did your brother live in it ? you could be liabable to cgt on the gift of the house to your brother or you could claim cgt - cat relief

in 2003 you sold the agri land and you could be liable to cgt on the disposal of it most likely you will be.

was withholding tax of 15% withheld on the disposal of the agri land ? as its a general rule

ps cgt is tax on the disposal of assets ie gift from yourself to your brother and the sale of agri land

cat is gift tax like the gift of the house and agri land from your parents to yourself

hope this clarifys the suitation and best advice is seek professional advice from a accountant or tax advisor as it can be a mindfield and its money well spent
 
Many thanks for the replies. I will go over what you have posted but in the meantime by general view on the review of CGT for 2003 is that I sold the land for less then the Market Value in 1997 converted to euro and using the index factor. Then therefore i made a capital loss and have no CGT to pay? Am I right on that?
 
Its not that simple. There were 2 disposals, the house and the land. We have no idea of the open market value of the house at the date it was transferred to your brother. This will affect the CGT position. You will need to get advice on this.
 
T McGibney said:
Its not that simple. There were 2 disposals, the house and the land. We have no idea of the open market value of the house at the date it was transferred to your brother. This will affect the CGT position. You will need to get advice on this.
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Thanks for reply, yes there was two disposals, Im only been reviewed for the year 2003. The house was transfered in 2000 and my brother agreed to deal with all costs assosiated with this so Im assuming this was dealt with. The site was sold in 2003 but does the house still come into it?I will defintely get advice on this, just trying to get an handle on it myself.
 
texet said:
Thanks for reply, yes there was two disposals, Im only been reviewed for the year 2003. The house was transfered in 2000 and my brother agreed to deal with all costs assosiated with this so Im assuming this was dealt with. The site was sold in 2003 but does the house still come into it?I will defintely get advice on this, just trying to get an handle on it myself.
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Well when they look at 2003, you will have to explain where the agri-land came from - this was a transfer that also included a house. So the logical next question for the tax inspector is to then ask, OK tell me what happened to the house? (They will, if they're any good, already actually know exactly what happened, assuming stamp duty has been paid on the transfers and the land registry folios reflect the transfers).

Based on the figures you have given though, I don't really see you having much, if any, liability here. But you do need to get professional advice.
 
Cheers mandelbrot yes makes sense that it will be asked. I do know stamp duty etc was paid when the transfer was done in 2000. Also assumed the same was sorted in 2003 as i thought the solicitor looked after all this including CGT . My mistake I guess. Seems crazy they are questioning it now, 8 years later.
 
Thanks for all the advice, sought professional advice today and I wasnt far off the mark but worth it for the reassurance
 
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