Transfer of Farm

Zippy2010

Hi all

Am long term browser but just decided to join as am looking for advise..

Parents are in their 80's and still "working" the family farm.. They are thinking of transferring it to me, am in my 40's and dont apply for young farmer exemption etc. I am working the farm but currently receiving no financial benefit from it.
What are the possible implications for tax - have a family home and some other land 10-20 acreas) which is tied up with inheritance with other people(very complicated). Am I correct in assuming its 20%
Will my parents be entitled to the non contrinutory pension if we transfer it as this could be their only income?
Who could advise me better (free of charge preferably as no income currently - lost my job about 2 years ago).
Thanks in advance for any advise...

Chevy RV

Hello Zipp2010,

There are a few things you need to watch out for.

Firstly, you parents will only receive a non-contributory state pension if their other assets e.g. bank deposits, shares are not substantial. The levels can be checked on the Department of Social & Family Affairs website.

Secondly, you will be liable to Inheritance tax at the appropriate rate but it should be quite small amount as you should qualify for Agricultural Property Relief (APR) which values the land at 10% of it's market value for tax purposes. The snag is that the land has to be held for at least 10 years to avoid clawback of the tax "saved".

You also mention about inheriting your other land 10-20 acres. It depends on who is inheriting this e.g. your wife. This can use another set of tax allowances.

Without the full picture,it's difficult to state the exact position. If you PM me with more detail, i will reply to you.

PS I am an accountant who has recently inherited a farm so that's how i know about this.


Regards,


Chevy RV

Shauny2010

If they give it to you in a will then there is no inheritance Tax from parent to child.

JohnBoy

Chevy RV wrote: »

PS I am an accountant who has recently inherited a farm so that's how i know about this.

We have an accountant amongst us!!!!!


Get thee over to the tax thread -> http://www.boards.ie/vbulletin/showthread.php?t=2055828424

Oh, and welcome to the muck savages section

Michelle1000

Hi, We are going through a similar thing, but slightly more complicated. I would advise that you strongly seek the help of a solicitor our solicitor was very helpful and has saved us a lot of money and headache. Also have a look on citizens advise it gives you all the information with regards to inheritance and capital tax gains, it breaks it all down and tells you the % and what the inheritance threshold is. Hope you get a good outcome

tibrok

Zippy, As far as I know there are 3 taxes to consider (not a professional so get it checked out.....),

Your parents pay Capital Gains Tax on land transferred. Likely to be nil since they will probably qualify for Agricultural Relief on transfer to son/daughter, if they have owned the land for greater than 10 years previously

You pay Gift tax (called inheritance tax if land transferred on death) on receipt of the farm. Likely to be nil if you qualify for Agricultural relief or APR as in Chevys post. To qualify for this valuable relief more than 80% of your total assets must be agricultural on the day after the transfer of the farm. It is important to tot up all your non farm assets prior to the transfer (eg house value - house mortgage, cash, etc). Eg if non farm assets=100,000, farm assets must be over 400,000 to qualify. If house in own name could consider passing half to partner.

Final tax is stamp duty payable by you. Likely to be 1% of total value of farm transferred.

It is well worth getting good advice and planning prior to doing the transfer. You will need to get land and SFP valued. It would be a good idea to put a full value on these if qualifying for all reliefs. How will your parents living costs be met after transferring the farm?

Good luck with it...