Parent's House on Farm Folio

WexTK

Hi all,

father going to transfer farm over to me in the coming months, I notice his house is on the land folio. Just wondering is it time-consuming to get the house off the folio prior to farm transfer - can it be done relatively quickly or will it need to be done a number of weeks in advance?

Thanks!

jimmy G M

WexTK wrote: »

Hi all,

father going to transfer farm over to me in the coming months, I notice his house is on the land folio. Just wondering is it time-consuming to get the house off the folio prior to farm transfer - can it be done relatively quickly or will it need to be done a number of weeks in advance?

Thanks!

The house and some ground around it can be put on a separate folio and your father retain ownership. This can be done at the same time as the land being transferred to you. However there will be extra paperwork to be signed etc and you can be sure a few bob more for the solicitor involved. However it's a relatively simple transaction.

Give your solicitor a call and he/she can explain better. Mite be worth your while shopping around for a few quotes for the transaction as well.

conseng

It will involve getting a land registry compliant map marked by an engineer. The simplest way is probably to Mark the house site on a map and the solicitor can get the remainder of the folio transferred to you.

Farmer Pudsey

Transferring farm and moving house to another folio is a simple legal procedure. However now I think you need two solicitors for any transfer. Price it with a few different solicitors and do a deal. I have seen solicitors fleece farmers on transfers. You may have stamp duty etc however I have seen a case where a solicitor charged 7.5K for such a process along with what stamp duty and costs were due.

Follow Pudseys motto when dealing with solicitors on going in door. ''How much will this cost'' and after answer ''is that the total fee''

keep going

Might be no harm to think it through to the next stage that is when your father passes on as to the possible consequences

Base price

When marking off the house area ensure that the septic tank and percolation area are also included. Saves a lot of hassle down the road.

Oldtree

Just a thought , will removing the house and garden from the transfer folio reduce the value of the transfer and be beneficial in inheritance terms? May be important if a large folio.

atlantic mist

Prob better to keep house in folio and get all transferred in one lot, think if the house is included in farm it is considered a farm dwelling so can avail in agriculture retirement relief otherwise treated as a house seperatly, will all depend on ur capital acquisitions limits and value of land and house or land seperate.
extra solicitor fees for splinting folio and two transfers and two valuations instead of one

Farmer Pudsey

atlantic mist wrote: »

Prob better to keep house in folio and get all transferred in one lot, think if the house is included in farm it is considered a farm dwelling so can avail in agriculture retirement relief otherwise treated as a house seperatly, will all depend on ur capital acquisitions limits and value of land and house or land seperate.
extra solicitor fees for splinting folio and two transfers and two valuations instead of one

Extra fees for solicitor and splitting folio should not cost much. Easy enough to mark folio/map youself, extra valuation should not cost extra and need not be done. In reality you are only movinf farm into your name not house so should be no extra cost.

It also give parents comfort factor that house is in there name. THe following is not alluding to OP but in cases where the transferee may not be married or in a case where down the line somthinh happen.

Take the following case this is just an example say transferee is unmaried, gets married, they and there spouse get killed in a plane crash on there honeymoon. The parents house in now part of the estate. Another senario, car crash spouse outlives transferee by a month all estate is now spouses relatives. Sh!t happens.

atlantic mist

Farmer Pudsey wrote: »

Extra fees for solicitor and splitting folio should not cost much. Easy enough to mark folio/map youself, extra valuation should not cost extra and need not be done. In reality you are only movinf farm into your name not house so should be no extra cost.

It also give parents comfort factor that house is in there name. THe following is not alluding to OP but in cases where the transferee may not be married or in a case where down the line somthinh happen.

Take the following case this is just an example say transferee is unmaried, gets married, they and there spouse get killed in a plane crash on there honeymoon. The parents house in now part of the estate. Another senario, car crash spouse outlives transferee by a month all estate is now spouses relatives. Sh!t happens.

I think it all depends on angle you look at situation, is its to be transferred to the next generation in the most tax efficient manner or is the greater worry security for parents. Two important issues which prob effect most farming families
It can all be willed back should an unforeseen event occur and id imagine include the whole farm and not just the house
Solicitors fee generally percentage based on valuation, id agree splitting the folio would not be the largest part of cost if that was decided
Taxation on agricultural land and building qualifies for ag relief in CGT term, a house on its own cannot be included in agriculture relief

Farmer Pudsey

atlantic mist wrote: »

I think it all depends on angle you look at situation, is its to be transferred to the next generation in the most tax efficient manner or is the greater worry security for parents. Two important issues which prob effect most farming families
It can all be willed back should an unforeseen event occur and id imagine include the whole farm and not just the house
Solicitors fee generally percentage based on valuation, id agree splitting the folio would not be the largest part of cost if that was decided
Taxation on agricultural land and building qualifies for ag relief in CGT term, a house on its own cannot be included in agriculture relief

No it cannot not in either of the senario I pointed out the house would be in jeopardy. You cannot disinherit your wife. She is entiltled to 1/3 of your estate If I remember right where there is children and 50% where there is none. Farm dwelling within a farm yard have very low value's and valuation cannot be adjusted anyway.

atlantic mist

yes i understand your point i thought that was in the case if no will had been drawn up .
But if you had a will, would the will not count, they are your specific wishes
my solicitor previously advised us to draw up a will (post marriage) for an unforeseen event occurring willing the house eachother(each are on title), so i thought maybe the will had final say over your estate

Farmer Pudsey

atlantic mist wrote: »

yes i understand your point i thought that was in the case if no will had been drawn up .
But if you had a will, would the will not count, they are your specific wishes
my solicitor previously advised us to draw up a will (post marriage) for an unforeseen event occurring willing the house eachother(each are on title), so i thought maybe the will had final say over your estate

http://www.citizensinformation.ie/en/birth_family_relationships/married_couples/marital_status_and_inheritance.html

Above are inheritance rights. Where it gets messy is when somthing happen where both die without changing will. The other Issue I did not delve into is seperation or divorce. My advice would be to put house in parents anf forget about tax issue that might or might not arise down the road.

allbuiz

Oldtree wrote: »

Just a thought , will removing the house and garden from the transfer folio reduce the value of the transfer and be beneficial in inheritance terms? May be important if a large folio.

So u think the parents having no security is beneficial? How could a private house be incorporated for Agri reliefs?

Oldtree

allbuiz wrote: »

So u think the parents having no security is beneficial?

Read the Op's post a little more thoroughly.

allbuiz

Oldtree wrote: »

Read the Op's post a little more thoroughly.

No need to b cheeky

allbuiz

Oldtree wrote: »

Read the Op's post a little more thoroughly.

Ur looking at this solely from a tax point of view, would the parents not need security if the bank required land as security for loans, etc.

Oldtree

allbuiz wrote: »

Ur looking at this solely from a tax point of view, would the parents not need security if the bank required land as security for loans, etc.

I am not sure what you are getting at. The OP's father is giving him the farm and in that context removing the house now from the folio would further reduce the value of the transferred asset and thus reduce a current tax liability.

allbuiz

Oldtree wrote: »

I am not sure what you are getting at. The OP's father is giving him the farm and in that context removing the house now from the folio would further reduce the value of the transferred asset and thus reduce a current tax liability.

The max value a parent can transfer to a child is €225,000. Assuming he is a young trained farmer he will b entitled to a 90% agri relif. Therefore if the house was worth €125 k and 100 A/C at 10k an acre there would be no liability!!

Farmer Pudsey

allbuiz wrote: »

The max value a parent can transfer to a child is €225,000. Assuming he is a young trained farmer he will b entitled to a 90% agri relif. Therefore if the house was worth €125 k and 100 A/C at 10k an acre there would be no liability!!

Oldtree put forward a possible longterm issue. If the house was withdrawn from farm folio longterm transferring it back may or may not incurr inheritance tax. If taking out any loans down the line the house could be withdrawn form the security by seperating then. However it is the unexpected that causes issues in situtations like this as I outlined.

moy83

If you were gifted the full tax free amount this year and left the house out of it to avoid going over the threshold can you be gifted another bit again after a certain amount of time or is it once in a lifetime tax break ?

atlantic mist

moy83 wrote: »

If you were gifted the full tax free amount this year and left the house out of it to avoid going over the threshold can you be gifted another bit again after a certain amount of time or is it once in a lifetime tax break ?

if you avail of full tax free amount then you will only use limit once
you can avail of maximum threshold from both you parents 225k*2
thresholds are only goin one way in last ten years and is that's down
so becoming more costly to receive inheritance as exchequer need the money

Farmer Pudsey

atlantic mist wrote: »

if you avail of full tax free amount then you will only use limit once
you can avail of maximum threshold from both you parents 225k*2
thresholds are only goin one way in last ten years and is that's down
so becoming more costly to receive inheritance as exchequer need the money

I think you are incorrect there I think it is a group threshold same as the threshold to for aunts/uncles etc is a group threshold. I think it is 225 fron both parents combined. However I may be wrong. I am sure that that other's are group thresholds.

atlantic mist

your right there pudsey it is a group threshold my mistake so only can avail up to 225k from parents
From a tax point of view it makes i still think it more sense to keep in folio and transfer at ag relief but we dont have enough information and legal and tax advise should be sought.
Trust is evident between parties as farm is being transferred to son, so cant see an issue with the house im sure the lad getting transferred the lad plans to look after his parents, im sure they are still receiving some form of income from farm even thou transferring.
If the house is kept separate and god forbid the parents ended up in long term care the house could be at risk from minister for health, plus the possibility it could be sold to third party

Oldtree

imo keeping the house will afford the parents a certain amount of security.

Farmer Pudsey

Risk far outweigh tax benefit. House has to be transfered five years to escape nursing home tax and then it is 1/6 per parent. You also have to have virtually no cash to escape. To have a serious tax issue the farm would have to be valued at over a million with 90% relief that still leaves 125k for house.

There are to many risks associated with transferring it with land. Look at what happened to Ivan Yates mother.

atlantic mist

to be fair losing the farm had nothing to do with farming, he gambled and lost, but he was aware he always had td pension to fall back on so he had security to provide for his mother.
farming low risk low margin, the bookmakers well thats another issue completely.
wonder statistically how many farms that get transferred over to family get into the same trouble as ivan, think the majority are more cautious than him, always exceptions to every rule. If you expect the worst, you'll never be disappointed.

allbuiz

Farmer Pudsey wrote: »

Oldtree put forward a possible longterm issue. If the house was withdrawn from farm folio longterm transferring it back may or may not incurr inheritance tax. If taking out any loans down the line the house could be withdrawn form the security by seperating then. However it is the unexpected that causes issues in situtations like this as I outlined.

Most banks require personal guarantees therefore any asset within the guarantors name isn't protected.

J.O. Farmer

allbuiz wrote: »

Most banks require personal guarantees therefore any asset within the guarantors name isn't protected.

I would have thought banks would want collateral more than personal guarantees. Isn't that what got them in some of the bother they're in now with bankrupt developers and no security.

allbuiz

J.O. Farmer wrote: »

I would have thought banks would want collateral more than personal guarantees. Isn't that what got them in some of the bother they're in now with bankrupt developers and no security.

Depends what capacity the loan is in, sole trader or LTD company but they generally seek collateral and a personal guarantee.

Nekarsulm

I would have thought that the Parents solicitor would have raised this point? And it is commonplace to have a clause inserted into the transfer agreement giving both parents "their day" in the farmhouse, irrespective of what happens their child or their spouse.

allbuiz

Nekarsulm wrote: »

I would have thought that the Parents solicitor would have raised this point? And it is commonplace to have a clause inserted into the transfer agreement giving both parents "their day" in the farmhouse, irrespective of what happens their child or their spouse.

The Loan contact may void any such agreements like this. Sometimes solicitors overlook things, sure look what's happening with the wind farm contracts.