Site to a child

misspiggy40

Hi All. Can anyone clarify this. I have seen it twice on past IPA taxation papers and am not sure of the answer.

Let us say you buy 6 acres for 120k. You give your child a 1 acre site off it which falls into the exempt category. You sell the rest for 200k which is market value. Forgetting about indexation, developement potential or anything else for the moment. Can you take the full 120k purchase price as your cost??

Second case, same purchase details. You give it all to your child and they build a house on it. Can any exemption apply??

Thanks in advance guys.

Mr. Incognito

In the first case you would divide the base cost.

So base cost 120 for 6 acres. 1 acre given to child exempt, and the base cost when selling the other five acres is 100.

In the second case, you are not entitled to the exemption as it is over the exempt guidelines.

You may think that you could just make two transfers one for the one site which you think would be exempt and the other for the additional five acres but there is specific anti avoidance legislation that deals with a disposal in a series of transactions and the exemption on the first transfer would be revoked.

misspiggy40

Thank you very much. You always make things so clear and neat.;)