Transferring a site after house has already been built

J

jimmyheff

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Hello,

Just looking for advice from anyone who has dealt with something similar.

Myself and my wife are looking to transfer a site into our own name even though we have built the house nearly five years ago now. Unfortunately between an architect half convincing me the site probably wouldn't pass planning permission, dealing with a traumatic family death and then when ready to start building after getting planning, COVID hit.

We didn't transfer the site before building work commenced, the site is my family land owned by my mother and the plot of land the site sits on is within a section of land I will eventually inherit. We tried to start the process of transferring the site recently but have been met with massive reluctance from my mother's solicitor as they are worried she will be hit with a massive Capital Gains Tax bill.

The house was self funded and built, between a small loan, personal savings and being in the trade myself, did up to 70% of the work myself, so there is no mortgage on the property. I'm just looking to see if anyone here has dealt with something similar and was successful in transferring a site without any major issues??
 
I'm not sure I'm 100% clear on the problem.

Reading your post it sounds to me like you built without planning permission on site you don't own. Is that a summary?
 
No, he got planning permission — in the second para he mentions being "ready to start building after getting planning",

But, yeah, he built on land that he didn't own. Obviously, with the permission of the owner and, obviously, knowing that the owner intended to gift the site to him. But, still.

And that's the problem. If the owner gifts the property to him now, it's an extremely valuable property, because there's a fully-built house on it. Because it's not an arm's length transaction she'll be treated as disposing of it at market value. It's worth a lot more than when she acquired it, because there was no house on it then,so there's a big capital gain. (Plus, of course, depending on the figures Jimmy could have a CAT issue as well. But let's leave that for another post.)

This is one of these "I wouldn't start from here" problems. Jimmy and his Mam could have arranged the transfer of the site before the work started. Or, if there was a reason for not doing that, they could have agreed that Jimmy would build a house on the site in consideration for his Mother's promise to transfer it to him, and they could have documented that agreement. Or no doubt they could have done other things to make sure that the enhancement to the property value from erecting the house was always going to accrue to Jimmy and not to his Mam.

But none of that happened. And if they start creating documents now, that looks extremely shonky.

I think you're going to need a good tax adviser on this one, Jimmy. There may be a way around this but it's not immediately obvious to me, and much depends on what the Revenue will accept, so I'd run this past them before implementing any plan your tax adviser comes up with.

Plan B, as I say, is just to inherit the property in due time, at which point the CGT problem goes away. (But not the CAT problem, if any.)
 
I read in the OP that planning was granted and he went ahead and built his house. However it would be proper to get ownership of of the site as well as the house. Financial planning, their own wills, family law, seeking a mortgage now - all good reasons to get this sorted.
Find out the tax implications and get it done.
 
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