The principle areas of taxation which will apply on a transfer of agricultural property are:

• Capital Gains Tax
• Capital Acquisition Tax
• Stamp Duty

There are various tax reliefs available and it is therefore vital to have a tax plan in place. 

A summary of the reliefs available are set out below.

Capital Gains Tax

Retirement relief
Retirement relief is available to farmers that are at least 55 years of age. The main condition of the relief is that the land was owned and farmed for at least 10 consecutive years prior to transfer or before entering into a letting agreement, subject to certain conditions.

If the conditions of the relief are met no capital gains tax would apply to the transfer of agricultural assets to a child or favourite nephew/niece.  If, however, the transferor is over 66 years of age an upper limit of €3m will apply to the value of the assets.

Careful planning in advance of any proposed transfer is vital to ensure that, if possible, all of the necessary criteria can be met at the time of transfer.  Significant tax savings can be achieved so early engagement with advisors is crucial.

The relief can also apply on a sale of the agricultural assets, subject however to reduced limits on the value of the assets.

Capital Acquisitions Tax

Agricultural relief
Agricultural relief is a tax relief on gifts/inheritances of agricultural property.  There have been significant changes recently in the qualifying criteria for this relief which places further obligations on a beneficiary. 

The beneficiary must satisfy the ‘80% agricultural property’ test on the valuation date, after taking the agricultural assets.  This means that 80% of their assets must consist of agricultural property.

To qualify for the relief, the beneficiary must

• for a period of at least 6 years after receiving the gift or inheritance farm the agricultural property,
• lease the agricultural property for a period of at least 6 years to a lessee who must farm the agricultural property
• beneficiary/lessee must have a farming qualification or spend not less than 50% of their normal working time farming the agricultural property on a commercial basis.

If a beneficiary successfully avails of Agricultural Relief the value of the agricultural assets is reduced by 90% for the purposes of gift/inheritance tax.  The availability of agricultural relief will, in most cases , result in a nil CAT liability. 

It is therefore important that a prospective beneficiary obtains professional advice to ensure that they meet the requirements of the relief before a transfer of the assets is effected.

Stamp duty

Special relief for young trained farmers
In order to qualify for this relief a farmer must be under 35 years of age on the date of execution of the transfer and must also hold a farming qualification.  The farmer must also retain ownership of the land and spend not less than 50% of their normal working time farming the land for a period of five years from the date of the execution of the transfer.

Consanguinity Relief for farmers
This relief applies a rate of stamp duty that is half which would otherwise apply.  The farmer must farm/lease the land for a period of 6 years from the date of the execution of the transfer.  The person who farms the land must be the holder of a farming qualification and spend not less than 50% of their normal working time farming the land.
 
Further information
The information above represents a summary of the requirements of the reliefs available.  It is vital that a full analysis of each individual’s circumstances is considered prior to any transfer to ensure that the reliefs are availed of.

Should you wish to avail of an initial consultation to consider your own circumstances, please feel free to contact any member of our team hereunder:
 

Jerry Lordan: Jerry.lordan@moorestephens.ie

Trevor Leacy: Trevor.leacy@moorestephens.ie

Padraig O’Donoghue: Padraig.odonoghue@moorestephens.ie