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Author Topic: Capital Gains Tax for farmland  (Read 8226 times)

cas

  • Joined Jul 2013
Re: Capital Gains Tax for farmland
« Reply #15 on: December 09, 2016, 02:52:44 pm »
Gift holdover relief for CGT applies to 'business assets' (ie the land would have to be used by your father in his business).  You really need to get proper advice from a solicitor (preferably one who is a member of the Society of Trust and Estate Practitioners 'STEP') as to whether this relief may apply in your case.  The effect of claiming holdover relief is that there is no immediate charge to CGT, but your father's gain on the land is passed to you.  So when you eventually sell the land, your gain is calculated by reference to the value of the land at the date your father acquired it.  If you keep the land until you die, the gain is wiped out.

For inheritance tax, there are two possible reliefs - agricultural property relief and business property relief.  These reliefs apply to lifetime gifts as well as on death.

juliem

  • Joined Aug 2014
Re: Capital Gains Tax for farmland
« Reply #16 on: December 09, 2016, 04:25:16 pm »
replying to Brimwood Farm......
The solicitor drew up the deed of gift 5 years ago and at that stage I had to get it valued by an estate agent.The estate agent valued the land at £24.000. At that stage there was no capital gains tax as no money exchanged hands.I had considered buying the land but my fathers estate would have been swollen by £24.000 and as he was on the inheritance tax borderline didn't want to do that.
Of course if he dies before 7 years you take a hit....but after 4yrs it does taper off.
He's still marginally in the inheritance tax band now...but hopefully if he lives till next April...we will be out of the woods.
It's an interesting question about when the Inland Revenue become interested...perhaps they look on google and become suspicious of upmarket grand houses that call themselves a farm. But there is a where you need to speak to an expert on inheritance tax planning.
I went to one of those financial roadshows once and the financial expert reckoned that Inland Revenue wouldn't bother to investigate an estate if it was worth less than a million pounds.
I will be looking to transfer the land by deed of gift to my own children at some stage...but won't leave like my father (hes 96) too late.

BrimwoodFarm

  • Joined May 2016
    • Brimwood Farm
    • Facebook
Re: Capital Gains Tax for farmland
« Reply #17 on: December 09, 2016, 10:09:41 pm »
replying to Brimwood Farm......
The solicitor drew up the deed of gift 5 years ago and at that stage I had to get it valued by an estate agent.The estate agent valued the land at £24.000. At that stage there was no capital gains tax as no money exchanged hands.I had considered buying the land but my fathers estate would have been swollen by £24.000 and as he was on the inheritance tax borderline didn't want to do that.
Of course if he dies before 7 years you take a hit....but after 4yrs it does taper off.
He's still marginally in the inheritance tax band now...but hopefully if he lives till next April...we will be out of the woods.
It's an interesting question about when the Inland Revenue become interested...perhaps they look on google and become suspicious of upmarket grand houses that call themselves a farm. But there is a where you need to speak to an expert on inheritance tax planning.
I went to one of those financial roadshows once and the financial expert reckoned that Inland Revenue wouldn't bother to investigate an estate if it was worth less than a million pounds.
I will be looking to transfer the land by deed of gift to my own children at some stage...but won't leave like my father (hes 96) too late.

Now that's very interesting...thanks for replying. I'm in a similar position in that I'm not buying the land; my parents want to gift me the land. They are not, therefore, making any profit on it in terms of actual physical money. Perhaps my folks can deed of gift me the land after all? Though on the .gov website it does suggest that a gift to anyone other than a spouse is subject to CGT.

I'm actually looking forward to see what an expert says about all of this so I can feed back!

bazzais

  • Joined Jan 2010
    • Allt Y Coed Farm and Campsite
Re: Capital Gains Tax for farmland
« Reply #18 on: January 01, 2017, 07:32:49 pm »
'one off' gifts to family - escape tax - as far as i am aware, as long as it not specifically setup to avoid tax.

also if its working land as in 'a farm' that will be worked again - has no cgt
« Last Edit: January 01, 2017, 07:34:41 pm by bazzais »

BrimwoodFarm

  • Joined May 2016
    • Brimwood Farm
    • Facebook
Re: Capital Gains Tax for farmland
« Reply #19 on: January 01, 2017, 10:20:30 pm »
'one off' gifts to family - escape tax - as far as i am aware, as long as it not specifically setup to avoid tax.

also if its working land as in 'a farm' that will be worked again - has no cgt

Thanks bazzais, I hope you're right! My folks are going to see someone in the know sometime over the coming months, so I hope it can get sorted out properly.

 

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