Offaly Solicitors and Notary Public, Thomas W Enright Solicitors: Expert Legal Advice
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The Transfer of a Site from a Parent to a Child - Taxation and Other Issues

30/1/2018

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How you gonna keep 'em down on the farm after they've seen Paree?

1. Capital Gains Tax (CGT)

 Application of CGT, chargeable persons and rates 

CGT applies in relation to any life time transfer of property including the transfer of a site

CGT is charged on the person who sells or transfers the property.

A charge is applied even if the person who transfers the property is not receiving any consideration or payment in return for it. In such a case the property is deemed to be disposed of at market value and CGT is charged on that value. 

Tax is payable on the difference between the value of the site at the date it was acquired by the transferor and the value it has on the date of the gift to the transferee, at a rate of 33%. 

However, in the case of a transfer of a site from a parent to a child, a CGT exemption is available.
 
 CGT exemption on the transfer of a site from parent to a child
 
If a person transfers land to their child to build a house which is to be the child’s only or main residence, the transferor will not have to pay CGT on the transfer.  
 
In order to qualify for this exemption, the site must be:
  • an area of no more than one acre
  • with a value of no more than €500,000

​ In addition, the child is required to build a house on the land and occupy that house as their only or main residence for a period of three years.  
 
Clawback of the relief
 
The exemption will be clawed back in circumstances where the child does not comply with the requirements.
 
So, if the child disposes of the site either
  • without having built a house on the site
            or
  • having built a house on the land, but without having occupied that house as their only or main residence for the full period of at least three years,
then, in such circumstances, the CGT that the transferor parent would have been liable to pay on the transfer to the child if the exemption had not been availed of becomes payable by the child.
 
This clawback does not apply in a situation where the child disposes of the land to a spouse or civil partner.

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Applying for the New Local Authority Mortgage Scheme? What You Need to Know

22/1/2018

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The Rebuilding Ireland Home Loan Scheme

The government has just launched another initiative to help people  – who, up to now, had been excluded from the housing market  – purchase their first home.
 
The scheme, called the Rebuilding Ireland Home Loan, is due to commence on 1 February 2018 and is aimed at first time buyers with annual salaries of less than €50,000 for a single applicant or less than €75,000 for joint applicants.
 
The main benefits of the scheme will be, firstly, the relatively cheap lending rates –  starting at 2% over 25 years – and, secondly, the fact that it will offer potential buyers a way around the Central Bank’s income multiple rule which limits mortgage borrowings to 3.5 times the borrower(s)' salary.
 
The scheme will apply to first time buyers of new and second-hand (and self-build) homes.

Applicants will be able to borrow up to 90% of the purchase price up to a maximum purchase price of €320,000 in Dublin, Cork, Galway, Kildare, Louth, Meath and Wicklow, and €250,000 in the rest of the country. The effect of this is that the maximum loan (90% of the purchase price) will be €288,000 in the seven above mentioned counties and €225,000 everywhere else.
 
The loan term will extend over a maximum term of 30 years. 

The Basic Terms and Conditions

  1. The scheme applies only to first time buyers. In other words, an applicant cannot be the current owner of a property. There may be some exceptions to this rule, for example, in the case of legally separated or divorced applicants, although this is not explicitly provided for in the details published to date.
  2. A single applicant's income must be less than €50,000 (gross).
  3. Joint applicants’ combined income must be less than €75,000 (gross).
  4. The primary earner must be in continuous employment for at least two years; the second applicant must have at least one year's continuous employment. A  self-employed applicant must submit two years certified accounts.
  5. The applicant(s) must be aged between 18 and 70 years and the loan term must end on or before a borrower reaches 70 years of age.
  6. The applicant(s) will have to prove that they have sought a mortgage from two lenders (banks or building societies) and have received inadequate offers or refusals from each before making an application for a House Purchase Loan to the local authority.
  7. If the applicant(s) are renting, they must have a clear rent account for 6 months prior to the application.
  8. The applicant(s) must be buying or building a house whose market value does not exceed the limits for the county in which it is located.
  9. The applicant(s) must occupy the house as their normal place of residence.
  10. The property must have a gross internal floor area of 175 square metres or less, be in good condition (on completion) and have good marketable title.
  11. The applicant(s) must be of good credit standing with a satisfactory credit record. The local authority will run credit checks with the Irish Credit Bureau.

Interest Rates

The scheme offers three different rates, as follows: 
  • 2%* fixed for up to 25 years (APR 2.02%*).
  • 2.25%* fixed for up to 30 years (APR 2.27%*).
  • 2.30%* variable (subject to fluctuation) for up to 30 years (APR 2.32%*).
* These are current rates and are subject to change.
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Important Changes to European Union (Basic Payment Scheme Inheritance) Regulations 2017

22/1/2018

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"Hmm, I wonder when am I going to get that cheque in the post?"

​​The new default position is that Basic Payment Scheme entitlements will now stay with the land.

The Minister for Agriculture has, by way of Statutory Instrument No. 639 of 2017, given effect in Irish law to EU Regulation 1307/2013.
                                 
The Statutory Instrument provides:
 
Where a deceased person bequeaths land in a will and –
  • At the time of his or her death held an allocation of payment entitlements under Regulation 1307/2013, and
  • made no provision for those payment entitlements in his or her will
such payment entitlements (or share thereof) shall transfer with the eligible land unless there is a legal impediment preventing the transfer.
 
The Explanatory Note to the instrument states:
 
This Statutory Instrument provides legal basis to the Department of Agriculture, Food and the Marine for the inheritance of Basic Payment Scheme entitlements where the will of a deceased farmer is silent in relation to these entitlements. The SI provides for the entitlements to transfer with the land in such circumstances.
 
Thus, the position in regard to an inheritance of entitlements is different under the Basic Payment Scheme than it was under the Single Farm Payment Scheme.
 
The position is that entitlements now transfer with the land unless otherwise specified in the will or unless there is some other legal impediment preventing such a transfer.
 
The Statutory Instrument was executed on 21 November 2017 and published in Iris Oifigiúil on 19 January 2018
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