Gifting a field and CGT

[tullah]

Asking for an owner occupier friend in his eighties who has a 5 acre field out on his farm boundary that abuts ten properties down one side. He intends to gift it to his daughter. The valuer says the field should be valued above Agricultural value due to the hope value closest to the houses perhaps wanting to extend their gardens in the future. Why would he say this? Is it to give his daughter a high base value should she sell on at a profit? But then how would CGT work for him or could he roll it over, and if he could roll it over then how would that work?

 

[Nearly]

Will he live 7 years?
May be cutting it fine.
A real valuation including hope value would reduce CGT in the future.
£100k an acre for land next to houses soon adds up.

If friend decides to gift it then better to do it in the next week and a half.
Cutting it fine again.

If he tries to sell the 5 acres now then all the houses will cry poverty at the moment and try and beg it.
One will always refuse and mess up the field.
Is there any other asset that he would roll it into?

12 months ago was the time, sorry.

 

[teslacoils]

One will always refuse and mess up the field.
Is there any other asset that he would roll it into?

Sell that bit to one of the other homeowners. Don't let one tits it all up.

 

[Flatland guy]

Asking for an owner occupier friend in his eighties who has a 5 acre field out on his farm boundary that abuts ten properties down one side. He intends to gift it to his daughter. The valuer says the field should be valued above Agricultural value due to the hope value closest to the houses perhaps wanting to extend their gardens in the future. Why would he say this? Is it to give his daughter a high base value should she sell on at a profit? But then how would CGT work for him or could he roll it over, and if he could roll it over then how would that work?

If gift at ag. value if daughter ever sells will mean a higher CGT payment. However if valued high and do not live 7 years (it is on a sliding reducing scale over the 7 years) might have to pay more IHT on the higher value but potentially less if sold. It really depends on long term aims but what people say to parents/gifter may be different when they are deceased. If you live for 7 years it is not really any problem what value it is unless selling later down the line.

 

[Grass And Grain]

Higher the value, better it will be for daughter if she ever wishes to sell. However, it would also mean potentially more IHT for dad if he were to pop his clogs in next few years. Depends how much other cash/assets he (and his wife) have. Allowed up to £325k, or £650k for married couple.

 

[Levelsman]

So many 'unknowns' in this.
Are there other siblings to be considered at some point?
Overall size of estate?
Spouse?
What would the CGT liability be based on different valuations including the value at which the donor acquired the land, whether by purchase, gift or inheritance.
Was Holdover Relief granted when friend acquired land?
Can donor afford to pay CGT if 100% gifted?
...etc etc!
As well as other points raised above!

 

[serf]

Higher the value, better it will be for daughter if she ever wishes to sell. However, it would also mean potentially more IHT for dad if he were to pop his clogs in next few years. Depends how much other cash/assets he (and his wife) have. Allowed up to £325k, or £650k for married couple.

Thought it was 325K + 175k = 500k if asset if gifted to your children !

 

[Levelsman]

Thought it was 325K + 175k = 500k if asset if gifted to your children !

Does that asset not just relate to your personal residence (home)?

 

[serf]

Does that asset not just relate to your personal residence (home)?

?? Not sure

 

[tullah]

So many 'unknowns' in this.
Are there other siblings to be considered at some point?
Overall size of estate?
Spouse?
What would the CGT liability be based on different valuations including the value at which the donor acquired the land, whether by purchase, gift or inheritance.
Was Holdover Relief granted when friend acquired land?
Can donor afford to pay CGT if 100% gifted?
...etc etc!
As well as other points raised above!

Other siblings and spouse already taken care of.
400 acre farm.
Donor can’t afford to pay CGT if 100% gifted.
How does rollover work in this situation as donor won’t be purchasing any more land or putting up sheds etc.?

 

[Grass And Grain]

Thought it was 325K + 175k = 500k if asset if gifted to your children !

It is, yes. The £175k is only for your primary residence though (£175k each if married couple). So a married couple gets up to £350k for primary residence, and then £650k on top of that. £1m in total. (A farmhouses would hopefully have APR.)

You only get the primary residence relief if your total assets are under £2m. Above £2m and there's a sliding scale.

Let's say your primary residence isn't a farmhouse and is worth £500k, so you'd have £350k covered by primary residence relief. That leaves you £150k of IHT allowance used to cover the rest of value of the house, which then leaves you £500k spare allowance for other cash/assets (that don't get APR).

 

[Princess Pooper]

Too much at stake here, tell him to talk to an agricultural accountant.