General Right of residence & CAT

W

william400

Member
Hi all

Would anyone here have experience of a parent being given a general right of residence and how it is treated in capital acquisition tax?

Revenue will allow the value of the asset being transferred to be reduced by 10 or 20%, depending on whether maixtenance support is to be provided also.

My precise question is if the reduction applies to the farmhouse only or the combined value of land and farmhouse. I want to do my own calculations before I talk to my accountant.

Thanks in advance!
 
william400 said:
Hi all

Would anyone here have experience of a parent being given a general right of residence and how it is treated in capital acquisition tax?

Revenue will allow the value of the asset being transferred to be reduced by 10 or 20%, depending on whether maixtenance support is to be provided also.

My precise question is if the reduction applies to the farmhouse only or the combined value of land and farmhouse. I want to do my own calculations before I talk to my accountant.

Thanks in advance!
Click to expand...
Has the house qualified for Ag relief up to this point?
 
Right of residence should only apply to the house not land so that's where the tax issues could arise, i think revenue can view it as not transfered from a CAP point of view until the person no longer resides there, the problem then is that the house would then not qualify for agri relief as it is not being transfered with the farm.
I think a non exclusive clause can be added to the right of residency to reduce its value and allow the house to be included with the farm, long time since I did anything with this so this could have changed.
 
I think there’s a small bit of land allowed to be sold tax free with the house, half an acre. If more land than a garden is being sold with the house there will probably be some CGT to be paid. You need to have the family members in the house up to it going on the market. I’m not sure whether you are getting the house or trying to sell it though?
 
Thanks for the replies. I’m hoping the reduction applies to the house only as I don’t think I’ll qualify for Ag relief when the 2nd assessment is done when the right of residency is no longer needed. Will have too much non farming assets I think. Don’t intend selling either the land or house.
 
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