stamp duty and gift tax on land transfer

ManFromAtlantis

hi. would be grateful for any help with this query.

man (70) full time farmer transferring/gifting farm to daughter (40). farm land worth 400k and buildings/tractor say €100k.
daughter will continue to farm the land. she is not a 'qualifying farmer' ie does not have the trained farmers course done and has no Ag degree.
unlikely to qualify under the min 80% farming related assets 'rule'.

Q1: stamp duty. anyone know how much approx / if any stamp duty would be due ?

Q2: gift tax: i'm totally confused on this. any idea if/how this might be charged.

i'm not looking for anything like exact figure just general info or approximations.

obviously will have to go to an expert at some point but hey this is a forum and any thoughts would be more than welcome.

vanderbadger

ManFromAtlantis wrote: »

hi. would be grateful for any help with this query.

man (70) full time farmer transferring/gifting farm to daughter (40). farm land worth 400k and buildings/tractor say €100k.
daughter will continue to farm the land. she is not a 'qualifying farmer' ie does not have the trained farmers course done and has no Ag degree.
unlikely to qualify under the min 80% farming related assets 'rule'.

Q1: stamp duty. anyone know how much approx / if any stamp duty would be due ?

Q2: gift tax: i'm totally confused on this. any idea if/how this might be charged.

i'm not looking for anything like exact figure just general info or approximations.

obviously will have to go to an expert at some point but hey this is a forum and any thoughts would be more than welcome.

first off it would make no sense (FINANCIALLY FOR HER) for the farmer to transfer anything to her till she gets green cert
next even if the farm is worth 400k -500k in reality you would wnat to get an auctioneer to put a more favorable valuation on it, in the current climate thats shouldnt be too hard
as for the exact rates i couldnt say but i would think in that case with those valuations it would be fairly horrible

ManFromAtlantis

thanks. do you know if the green cert beneficial if you are NOT under 35 ?

niallf

Hello,

I think the following taxes apply

1.Stamp Duty at 6% of value. Down to 3% if transferred from parent to child.

2. Capital Acqisition Tax: I think its a sliding rate. If the daughter doesnt have a lot of other assets in her name she might quality for full relief.

I think the 'green cert' is irrevelent in this case as she is over 35.

Ultimately the tax to be paid will depend on the valuation of the land.

Hope this helps, definately go to solicitor/accountant though!

Niall

Juniorhurler

vanderbadger wrote: »

first off it would make no sense (FINANCIALLY FOR HER) for the farmer to transfer anything to her till she gets green cert
next even if the farm is worth 400k -500k in reality you would wnat to get an auctioneer to put a more favorable valuation on it, in the current climate thats shouldnt be too hard
as for the exact rates i couldnt say but i would think in that case with those valuations it would be fairly horrible

Stamp for parent to offspring is reduced to 3% on agricultural land buildings etc.
There is absolutely NO BENEFIT IN THE GREEN CERT IN THIS CASE as she is over 35 years old. All exemptions that the green cert qualifies you for run out when you turn 35. These exemptions were here to encourage older farmers to hand over to the younger generation so were purposely designed to run out at 35. I know this as I enquired about the green cert and Teagasc told me it was pointless for me to do it as it was costing me €2k for the course plus 20 days off work at my own expense plus 3000 miles driving, time away from family etc. to save about €12-13k in stamp.

Juniorhurler

BTW was also advised to get a herd no. in my name now by teagasc as the green cert will become a compulsory requirement for NEW ENTRANTS to farming in a couple of years. By getting my own herd no. now it will mean that I shouldn't ever need to do the green cert.

niallf

i should add that there is no stamp duty on inheritance, so that could be an option

ManFromAtlantis

thanks for all the replies.

thats interesting about poss getting a herd no.

re the inheritance option. that nearly sounded sinister for a min ;-)

she prob wont qualify under the 80% assets rule for 90% reduction on valuation re gift tax. is there any allowance for transferring a working farm ((and will be kept as a working farm) parent to child. thought i read it in farmers handbook but cant find it now.


might be more of a tax question but say approx €330k is the amount allowed gift tax free from parent to child. i wonder if gift was valued at say €500k would it then not just be the 'excess' over the €330k that might be taxable?

thanks again.

Username John

As far as I can see...

The CAT threshold seem to be 414k for transfers from parent to child
http://www.revenue.ie/en/tax/cat/leaflets/cat2.html

So if there is 500k, there there is 85k odd left for CAT at 25% which would be 20k odd... which is a fair bit...

You say she would not qualify for the 80% rule. Are you sure?

Not sure of your situation, but a few points on the 80% rule
- If she owns a house, the amount owed on the mortgage can be put against this (So if she has a 200k house, but has a mortgage of 50k, then she only has a net worth of 50k on the house, which means she would still qualify)
- If she has assets such as cash, it is possible (and legal) to transfer the money to her spouse (tax free, without any CAT catches), and it would then no longer be counted in the 80% rule calculations...
http://www.revenue.ie/en/tax/cat/leaflets/cat5.html

You'd want to talk to a solictor really....

hurling_lad

ManFromAtlantis wrote: »

thanks for all the replies.

thats interesting about poss getting a herd no.

re the inheritance option. that nearly sounded sinister for a min ;-)

she prob wont qualify under the 80% assets rule for 90% reduction on valuation re gift tax. is there any allowance for transferring a working farm ((and will be kept as a working farm) parent to child. thought i read it in farmers handbook but cant find it now.


might be more of a tax question but say approx €330k is the amount allowed gift tax free from parent to child. i wonder if gift was valued at say €500k would it then not just be the 'excess' over the €330k that might be taxable?

thanks again.

It will just be the excess over €330k that will be subject to 25% CAT

Just to note on the 80% rule - the revenue states that "For the purposes of the relief, a 'farmer' means: an individual in respect of whom at least 80% of his or her assets, after taking a gift or inheritance, consist of agricultural property on the valuation date of the gift or the inheritance."
Note that if the woman is married, she can transfer any assets to her husband in advance of the valuation date with no tax implications.

whelan1

there is a great thread on all this alittle bit down the board.... makes interesting reading

johnstown

Bear in mind that the way that CAT tax works is due to be completely overhauled, most likely in the next budget. This is as per the commission on taxation (COT) report and also a stipulation by the IMF for tax reform. COT recommended a restriction on existing reliefs and most likely result in a tiered tax scale. Who knows what this could result in. I suppose it would depend a lot on who the next government are (imagine Labour/Sinn Fein!).

That farmers daughter could consider purchasing Agricultural Assets in advance of a transfer in order to make the threshold or hurling_lad says, if she is married, transfer assets to her husband.