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Transferring a Farm

As with all succession planning, there are many considerations and complexities.  However, a farm is not just a business.  It can often be a family home too.  

Considerations include:

  • Who works the farm and invests their time and energy to it?
  • Do other family members/ siblings/ children to be catered for and what are their situations in life?
  • The family home is normally inseparable from the business.
  • If the transfer is during the owner’s lifetime, the owner will require an income, as well as possibly the recipient.
  • Are there pensions available to the transferor?
  • How much to transfer?
  • Should part of the property be leased, instead of transferred?
  • The implications of death, divorce or separation of the transferee.

Where property is being transferred as a gift, two solicitors are required – one to represent the transferor and one to represent the tranferee.  Not only is this recommended but it is, in fact, law, since 1st January 2013. 

The ‘Conveyancing Conflicts Task Force Regulation’ was introduced from 1st of January 2013.  Concerns were raised regarding property transfers involving those who are vulnerable.  This regulation was introduced to protect people from possible undue influence from relatives or friends in transferring their property e.g. to avoid an elderly person being forced or misled into ‘signing over’ the family home.  If there are separate solicitors representing each party in the transfer, both are protected and a potential conflict of interest is avoided.  These two solicitors cannot be working within the same company. 

It many instances, it can seem senseless and expensive for families to fulfil this requirement.  However, the regulation is necessary in order to ensure that everyone is getting a fair deal.  At John A. Sinnott  & Co. Solicitors, we will discuss all costs in advance with you before commencing any work .

Tax Implications

A person can receive property up to the following values without paying Capital Acquisitions Tax:

  • No limit to a spouse
  • Up to €335,000 to a child
  • Up to €32,500 to a sister, brother, niece or nephew
  • Up to €16,250 to anyone else

Capital Acquisitions Tax at 33% is payable by the transferee on any surplus above these amounts, unless he/she can avail of tax ‘reliefs’.  

Capital Acquisitions Tax – Agricultural Relief

Agricultural Relief , if you qualify, means that the person receiving the property is only assessed for Capital Acquisitions Tax on 10% of the value of the farm. 

You can claim Agricultural Relief if you receive a gift or inheritance of agricultural property and you qualify as a farmer.

To qualify as a farmer, the value of your agricultural property must make up 80% of your total property value on the valuation date. This is called the ‘Farmer Test’. This does not apply where agricultural property consists only of trees and underwood.

If the valuation date is on or after 1 January 2015, to qualify as a farmer you must either:

  • farm the agricultural property on a commercial basis for at least six years from that date

or

  • lease the property to someone who farms the agricultural property on a commercial basis for at least six years from that date.

Additionally, the person receiving the gift or inheritance, or the person leasing the property must either:

  • have an agricultural qualification

or

  • farm the agricultural property for at least 50% of his or her normal working hours.

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