House built on land owned by parent.

Discussion in 'Sites, planning, self-builds and extensions' started by siteissues, Oct 9, 2009.

  1. siteissues

    siteissues Registered User

    For six years have lived in self build (self financed) with full planning permission etc on 1/4 acre site that is owned by farming parent. Have no idea what site is worth or house (but would guess site less than 40k and house really 200K to 250K).

    Sibling did same thing after me but nows wants to transfer site into own name and after visiting solictor realise there is trouble ahead. The solictor advised immediate action as next budget looks like there will be big changes around this area.

    I have read other posts here (and other tax/legal websites) around stamp duty, CAT and CGT and their was only one post ideally reguarding my issue and no one had answered it.

    My questions are
    1) to register site what tax is payable
    2) i have no intention of moving or selling etc so should I just let things lie as they are (implications of this).

    Any advice is welome. Thank You for your time in advance.
  2. Maread

    Maread Registered User

    Hi Siteissuses,

    I presume you do you not have a mortage otherwise the financial institution would require you to have the site in your name. Is this what you mean by self financed?

    I;m no expert but certainly it could be very messy in years to come.
  3. Monsoon

    Monsoon Frequent Poster

    Hi siteissues

    I have some posts up about something similar - be very careful as I have gotten myself into a right mess which I cant now afford to get out of and it looks like I may lose my home now as I cannot secure the funds to sort this out.
    My advice would be read as much as you can and you will need a good solicitor and tax advisor (but be aware you can get bad advise) if you find them pm me the details as Ive now seen solicitor and two tax advisors valuers etc etc mounted up bills and got nowhere - hate to be the bearer of bad news but I just want you to be careful. It would also cause problems if your sibling wanted to sell or remortgage as the house is not theirs to do this with.
    Also - the thing I find most stressful is to find out that your home is not actually your own and you are at the mercy of a parent who owns your house..

    It will cause problems - in the future - when the parent passes away - so one option is to have it willed - this will incur inheritence tax but no stamp duty, CGT mabye your best option.
    Otherwise you will need up to date valuation for the house as the taxes due will be based on this - legally the house is owned by the the person who owns the site - crazy but thats what I was told.

    @maread - financial institution doesnt always look for this - in my case they didnt.

    would love to hear how you get on - feel free to pm me if you would like as I too searched in vain for a similar situation
    My most recent advice from the solicitor is to go and talk to revenue directly - this was the one thing they all said not to do!!! so unfortunately I dont have a quick fix.
    Best of luck
  4. siteissues

    siteissues Registered User

    cheers for the replys. Yip no finance involved only a small loan and saved capital.

    I visited the family solictors two weeks ago now who told me they would be in contact in few days but no. The same solictor acting for the three parties involved. At the meeting the solictor reckoned a quick phone call to revenue would sort out how much stamp duty Id have to pay. Site valued at 28K so halving the stamp duty rate not much outside their fees and folio map and land reg fee.

    When my sibling first approched sol about own site they nearly had a heart attack stating it would cost 1000's as tranferring an asset not just a site but now all calm. Went on about how house insurance not valid as policy in one name but owner of house another.

    I will post when I hear anything to update.
  5. Brendan Burgess

    Brendan Burgess Founder

    I don't know the answers to the question, but I would strongly suggest that you sort this problem out now. People have a tendency to avoid dealing with problems which are serious but not urgent.

    But this problem could get a lot worse.You could fall out with your parents and you own a house but they own the site. Your parents' will may be vague and others may dispute it. The values of the site and house may have increased by the time you do the transfer and the tax hit will be higher.

    I am no expert, but it seems to me to be just the conveyance of a site worth probably around €100k at the time of the gift. I would have thought that the gift was made when the house was built. There won't be any gift tax - CAT, assuming you have received no other gifts from your parents. Your parents will be liable to CGT - say at 25% of the increase in value of the site. So that could be €20k. Stamp duty will be quite small.

    But for all of this, you will have full undisputed title to your own home. You can sell it. You can fall out with your parents. They can do what they like with their will.

    The advantage of doing nothing is that when your parents die, the transfer to you will not be a disposal for CGT purposes, so they will save CGT. That, of course, is the current tax law, which may well change by the time your parents die.

    So I would address the problem now and resolve it.
  6. Monsoon

    Monsoon Frequent Poster

    Hi again

    Are you sure your solicitor is correct. My solicitor advised me that as my father part owned my site legally he half owns my house even though its my mortgage and I have made all repayments on the house. therefore the transfer involves the current site cost plus house cost which leaves a lot of CGT due. In your case how can you be the legal owner of your house when you dont own the land its build on? One of us has been given incorrect legal advice here - Im hoping to be honest its me... also - 28K for current market value of a site seems extreemly low - I got a valuation done this year and it turned out to be 175K for my site which was a lot more than I had expected unfortunately - you should get a valuation done. But I totally Agree with Brendan - if you can get it sorted now - and given the similarities here with my own situation I really would apprecate it if you could update how you get on.. Hope it gets sorted for you,
  7. siteissues

    siteissues Registered User

    Just rang solictor then now as i hadnt heard anything about this issue (sibling has own sorted out but I dont know final bill or anything). Sol wrote to revenue, no reply, wrote again and rec an acknowledgement. Stamp duty looking like 3percent of market value of site and as parent over 55 years exception from CGT as long as site part of working farm till I built. So looks like good news. Hope this helps.

    Site is valued, in a lovely quiet area in west of ireland, newly built three bed houses in local estates in small village town around here are being marketed/sold for €99,000 and bigger two bed for €95,000 although people say the sellers are all open to offers.

    Ill update when more progress.
  8. cork boy

    cork boy Registered User

    Lads, the following is an extract from the Revenue Commissioners manauals - I suspect that you will be ok if the site and house do not exceed €500,000 but I would get the site signed over before the budget. Get a good solicitor ASAP

    "Transfer of a site to a child
    [FONT=Times New Roman,Times New Roman]

    Section 83A of the SDCA. ​
    [/FONT][FONT=Times New Roman,Times New Roman]
    This section provides for an exemption from stamp duty where a parent transfers a site to a child for the purpose of that child building their principal place of residence.
    The value of the site must not exceed €500,000 and the size, exclusive of the area that the dwellinghouse will be constructed on, must not exceed 1 acre.
    The child does not need to be a First Time Buyer to avail of the relief but can only avail of it once.
    Where relief under section 83A is claimed by a child on the transfer of a site from their parent, it will be regarded as having been properly claimed in circumstances where ​

    • the site is subsequently transferred into the joint names of the child and his/her spouse or partner,

    • the transfer into joint names is being effected in the context of the raising of funds from a financial institution for the purposes of the construction a house on the site and

    • the house constructed on the site will be occupied by the child, in conjunction with his/her spouse or partner as their only or main residence

  9. siteissues

    siteissues Registered User

    Letter from sol yesterday. all accepted by revenue so no stamp duty, CGT, CAT become payable on transfer. Two conditions though-site less than one acre and must prove my savings and loan. Need to organise a map (think €25) and area of site marked by engineer (cost €300) and it was €50 to value site. DELIGHTED but as Corkboy said I need to get this sent into revenue before budget. Cheers for all the replies and I'll update if anything else to add.
  10. Sitequery

    Sitequery New Member

    I am having the same issue now 8 years later - self- built house (with planning permission) on .8 acre of parent's farm but never transferred ownership of site. Not sure how to proceed now. Any advice from people who have previously experienced this would be greatly appreciated.
  11. noproblem

    noproblem Frequent Poster

    I'd suggest you go to your solicitor, have a chat and explain to him your query/problem. You've got good information given above as back up, although it might need updating from a tax point of view. Tell us how you get on as the others did, as i'm sure their experiences and feedback has helped plenty of people on here over the years.