Soem of your property questions answered
Tax and gifting a site
My father has agreed to give me a site of around half an acre on which to build a house - it is part of a 30-acre farm. There is good road frontage on the site and, as I will be living in the house and several similar situations have arisen in the locality, I believe there will be no problems getting planning permission. However, my father who is very nervous in these matters, is concerned that he, or indeed I, will be hit for tax if he simply hands over a site to me. What is the position?
The two taxes that may be on your father's mind are stamp duty and capital acquisitions tax (CAT). You don't say what is the value of the land in question but, given that it is a half acre of farm land without planning permission, it is reasonably safe to assume that its value is below €254,000. That's an important figure because there is an exemption from stamp duty in the case of a transfer of a site from a parent to a child where the value of the site does not exceed €254,000 and the purpose of the transfer is to enable the child to build a house on the site which will be occupied by the child as his/her only or main residence. The other tax to bear in mind is CAT. This is the overall name for both gift tax and inheritance tax. Again the value of the site is the key piece of information. No gift tax is payable by you if the site is transferred directly to you by your father because parents can transfer up to €466,725 in value to a child without the child being liable to any gift tax.
Devaluing a property
I live alone in a three-bedroom Victorian redbrick terraced house with two large double bedrooms and one single. I now want to extend my bedroom by knocking through to the adjacent single bedroom and turning it into a large walk-in wardrobe. I have been advised that in doing so I would be seriously devaluing my house, but surely a properly fitted-out walk-in wardrobe is a plus in this day and age. I hope to trade-up in around five years so I am keen not to make the house unsaleable.
You will almost certainly be devaluing your home if you change it from a three-bed to a two-bed. That's because a bigger house simply appeals to a wider market. However, if your dream is to have a huge walk-in wardrobe (and you are not alone in that!) don't despair. This column has seen countless examples of single bedrooms changed into walk-in wardrobes that haven't impacted drastically on the sale price of the house simply because the conversions have been done in such a way that permits easy conversion back by new owners. That usually means leaving the landing pretty much as is - so the attractive original Victorian door and architrave leading into the single bedroom is left in place, though obviously not used and blanked off. A lot of people won't be too put off by the prospect of filling in an entrance between two bedrooms - it's not going to involve much more that plasterboard, plastering and repainting. Also if there is decorative cornice work and a fireplace in the single bedroom, try to incorporate these original features into your wardrobe design. Please keep one thing in the forefront of your mind - not the money value of your house but how the house can be made as comfortable as possible for you.
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Unfortunately, it is not possible to respond to all questions. The above is a representative sample of queries received. This column is a readers' service and is not intended to replace professional advice. No individual correspondence will be entered into.
