TAX - Farm Transfer to Son/Daughter

bobba_gonna

I have being asked to check this out for a relative. He's about to talk to an accountant, but was asking me to research it for him anyway.

Basically the farm is 40 acres with some sheds and basic machinery, stocked with sucklers. He has being farming away in his mother's name (farm owner) since his father died. He wants to get it transferred to his own name and put some money back into the place.
From what I gather he wont qualify for Agricultural Relief as his assets now (House paid for and some money in the bank) are worth about the same as the farm itself. He's not a qualified farmer either, and not under 35 years.

So from what I gather, he is liable to 33% tax (Capital Aquisitions Tax) on the farm value, in excess of €225,000, the new threshold. So if the farm is worth say €400,000, that's (175,000 x 33%) €58k. On top of that he has 2% Stamp Duty, which is €8k.

Am I missing something? He's in for some shock. Surely, this can't be right. As he say himself, the farm hardly makes any profit.

rangler1

bobba_gonna wrote: »

I have being asked to check this out for a relative. He's about to talk to an accountant, but was asking me to research it for him anyway.

Basically the farm is 40 acres with some sheds and basic machinery, stocked with sucklers. He has being farming away in his mother's name (farm owner) since his father died. He wants to get it transferred to his own name and put some money back into the place.
From what I gather he wont qualify for Agricultural Relief as his assets now (House paid for and some money in the bank) are worth about the same as the farm itself. He's not a qualified farmer either, and not under 35 years.

So from what I gather, he is liable to 33% tax (Capital Aquisitions Tax) on the farm value, in excess of €225,000, the new threshold. So if the farm is worth say €400,000, that's (175,000 x 33%) €58k. On top of that he has 2% Stamp Duty, which is €8k.

Am I missing something? He's in for some shock. Surely, this can't be right. As he say himself, the farm hardly makes any profit.

He'd probably qualify for business relief, which is similar, it'd be worth looking into any way

ABlur

Stamp duty is 1% on parent to child transfer.

bobba_gonna

ABlur wrote: »

Stamp duty is 1% on parent to child transfer.

Not after 31 Dec 2014, with the abolition of 'Consanguinity relief'.
See
agriculture.gov.ie/agri-foodindustry/agri-taxationreview/indicativelistofagri-taxmeasures/stampdutymeasures/

bobba_gonna

ABlur wrote: »

Stamp duty is 1% on parent to child transfer.

Not after 31 Dec 2014, with the abolition of 'Consanguinity relief'.

See;
agriculture.gov.ie/agri-foodindustry/agri-taxationreview/indicativelistofagri-taxmeasures/stampdutymeasures/

mayota

bobba_gonna wrote: »

Not after 31 Dec 2014, with the abolition of 'Consanguinity relief'.

See;
agriculture.gov.ie/agri-foodindustry/agri-taxationreview/indicativelistofagri-taxmeasures/stampdutymeasures/

Extended for another year.

LivInt20

Will probably qualify for business relief.

Dont forget the Capital Gains Tax for his mother. She maybe entitled to Retirement Relief.

Make sure Entitlements are also transferred with the land.

mayota

If land is transferred to child can the farmer continue farming the land and continue claiming entitilments, i.e the only change being he no longer owns the land. What complications could this bring up, remembering he availed of retirement relief.

LivInt20

mayota wrote: »

If land is transferred to child can the farmer continue farming the land and continue claiming entitilments, i.e the only change being he no longer owns the land. What complications could this bring up, remembering he availed of retirement relief.

No problem doing this. Just watch for the taxes above. CAT, CGT, Stamp Duty. You do not have to retire after you claim retirement relief.

bobba_gonna

rangler1 wrote: »

He'd probably qualify for business relief, which is similar, it'd be worth looking into any way

Thanks Rangler, that's exactly what I was looking for.

I found this on the revenue.ie site under "Business Relief - CAT 4"

"Agricultural Property

Agricultural property which fails to qualify for agricultural relief may qualify for business relief providing the relevant criteria are met"