We most commonly see the transfer of a site from a parent to a child, in a rural context. Typically, this is done “voluntarily” .i.e. no money or consideration is paid by the child to the parent. The site is transferred in return for “natural love and affection” the child bears for the parent.
While, in theory it sounds relatively simple, there are a number of legal, tax, and family planning considerations to be taken into account. Below, I have highlighted some of these considerations and a short list of some of the documents your Solicitor will need.
Where is the site? Is it likely to get planning? Your Architect should be your first port of call. There is no point in transferring a site if the local Council is not going to grant planning permission to build a house. A good Architect will be able to hold your hand and guide you through this process. They may attend pre planning meetings with the local planning department in order to establish the likelihood of success of your potential application.
Your Solicitor will need the map in order to prepare the Deed (legal document which transfers ownership of the site) transferring the site. Your Architect will have prepared this as part of your application for planning permission.
A couple of questions to consider regarding the maps. Does the site have access onto a public road? If not, is a Right of Way required? If so, these will need to be marked and clearly identified on the map. Is the site boundary naturally defined? Or will it be necessary to place a covenant (a contractual promise) in the Deed obliging the child to erect and maintain a suitable stockproof fence.
Your Solicitor will need a valuation of the site, in order to submit a Stamp Duty return to Revenue and in order to be able to advise regarding the potential tax implications of the transfer. You will need to instruct an Auctioneer to prepare a valuation and they may charge a small fee for this.
Stamp Duty on commercial transfers is currently levied at a rate of 7.5% of the value of the property being transferred and a site is classed as a commercial transfer for stamp duty purposes. Even though you may not be paying any money for a site, you will still be required to pay the stamp duty on the value of the site.
However, under the Residential Development Stamp Duty Refund Scheme you may be entitled to a refund of up to 11/15ths of the Stamp Duty if you meet certain criteria.
Capital Acquisitions Tax
It may be necessary to get advice regarding the tax implications of the transfer. The child receiving the site should generally not be liable to pay Capital Acquisitions Tax depending on the value of the site at the date of transfer. However, if the child has a partner and the site is being transferred into joint names with that partner, this may give rise to a CAT liability and will need to be considered.
Legislation prohibits one solicitor or firm from acting for both sides in this transfer, i.e. it will be necessary for both the parent and child to have separate legal representation. Normally, it would not be usual for the child receiving the site to cover the costs of the transfer and this should be borne in mind when doing so. Contact your Solicitor and they will be able to advise you accordingly.