Vol. 524 No. 2
244 Mr. Timmins asked the Minister for Finance the plans he has to address the apparent injustice whereby a sibling receiving a site for a house from his/her parent or parents has to pay an inordinate amount of tax due to the rapidly increasing value of such properties; and if he will make a statement on the matter. [22381/00]
Where a child receives a site for a house from his/her parents, the child may be liable to stamp duty and capital acquisitions tax – CAT
The rate of stamp duty applicable will depend on the market value of the site. The normal rates of stamp duty on transfers of non-residential property, that is, land are as follows: 0 – 5,000 – not liable; 5,001 – 10,000 – 1%; 10,001 – 15,000 – 2%; 15,001 – 25,000 – 3%; 25,001 – 50,000 – 4%; 50,001 – 60,000 – 5%; and over 60,000 – 6%.
However, transfers between relatives are at half the above rates. All parties must be blood relatives for this relief to apply.
The transfer of a site from a parent to a child would also be considered a gift or inheritance for CAT purposes. However, a tax-free threshold of £300,000 applies on transfers from a parent to a child. CAT would only be levied on the value of the site, if any, in excess of this threshold. Where a child has received previous gifts or inheritances since 2 December 1988 from a parent, the value of these benefits must be taken into account for the purposes of determining the current, if any, liability to CAT.
In practice, therefore, the only liability to tax for a child receiving a site from a parent(s) is that arising from stamp duty – and that at a rate which is half the normal rate.
It should be noted, however, that the transfer of an asset is regarded as a disposal at market value for capital gains tax – CGT – purposes regardless of what, if any, consideration is received in return. Consequently, where a parent transfers a site to a child, the parent would be liable to CGT, in the normal way, on any chargeable gain over the period of ownership of the site by the parent, at a rate of 20%. The first £1,000 of chargeable gains of an individual for a year of assessment is exempt.
