Revenue Note for Guidance
This section provides exemption from capital gains tax in respect of any gain on a disposal, subject to conditions, on or after 6 December 2000, of a site by a parent or his or her civil partner to a “child” and that child’s spouse or civil partner.
(1) The term “child of a parent”, in relation to a disposal for which relief is claimed under the section, includes an individual who resided with, was under the care of and was maintained at the expense of, the person making the disposal throughout a period of 5 years (or periods which together amounted to 5 years), before the individual concerned reached the age of 18 years, but only if the claim is based on the uncorroborated testimony of one witness.
(1A) The section applies to a disposal of land having a market value that does not exceed €500,000 at the date of the disposal and the area of the land being disposed of does not exceed 0.4047 hectare, i.e. 1 acre (exclusive of the area on which the house is to be built).
(2) The disposal by a parent or his or her civil partner of the land to a child must be for the purpose of enabling the “child” to construct a dwelling house on the land on which a dwelling house is to be occupied by the “child” as his or her only or main residence.
(2A) The term “disposal” in subsection (2) includes a simultaneous disposal by both parents/civil partners to a child.
(3) If the child disposes of the land or part of the land without a dwelling house having been built on the site and occupied by the “child” as his or her only or main residence for a period of 3 years, then the chargeable gain which was exempted is treated as accruing to the “child” at the time of that disposal. However, a sale to the spouse of the “child” does not give rise to such a tax charge.
(4) Only one tax-exempt disposal of land is allowed to each “child” under the section. However, if subsection (3) has been applied so that the full amount of the exemption in respect of a disposal to a “child” has been effectively withdrawn, a further disposal of land to that “child” is entitled to be exempted if the conditions of the section are met.
(5) The section applies to the disposal of a site to a child of the civil partner of an individual if all other conditions of the section have been met. For this purpose, “disposal” includes a simultaneous disposal by both civil partners.
(6) The references in subsection (2)(a) to a “child of a parent” and the references in subsections (2)(b), (3), (4) and (5) to “child” are deemed to include that child’s spouse or civil partner.
Relevant Date: Finance Act 2021