Where parents are fortunate to own land they may wish to consider gifting this land to their child to enable them to construct a home.  Below we consider the tax implications of transferring a site to a child under three tax headings, capital gains tax (CGT), capital acquisitions tax (CAT) and stamp duty (SD).

CGT:

The transfer of a site to a child will be a disposal for CGT purposes for the parents and any gain on the disposal would be subject to CGT at the current rate of 33%. An exemption from CGT is available provided:

• The market value of the site does not exceed €500,000.
• The child uses the site to build their principal private residence.
• The area of the site, excluding the area on which the house is built, is less than 1 acre.

CAT:

Where the site is gifted to the child, a liability to CAT may arise for the child. A child can receive total gifts/ inheritances from their parents up to a value of €335,000 before CAT at the current rate of 33% becomes payable.  The value of all gifts / inheritances received since December 1991 are aggregated to determine if the €335,000 threshold has been breached. Assuming that the child has not received any prior gifts / inheritances from their parents  and that the market value of the site is less than €335,000, a liability to CAT on the transfer of the site should not arise.

SD:

The transfer of the site will be liable to SD.  The rate of SD is currently 7.5%. Where a residential property is built on the site it may be possible to claim a refund of a portion of the stamp duty paid under the Residential Development Stamp Duty Refund Scheme. If you are considering transferring a site to a child please contact a member of the tax team at info@cooneycarey.ie and we would be delighted to assist.