agricultural relief

tom_tarbucket

I just read this article:

http://www.agriland.ie/farming-news/what-are-the-tax-implications-of-leaving-a-farm-worth-e750000/

and I do not understand it........specifically this line:

"In order for the benefciatry to avail of agricultural relief, the test is that more than 80% of their assets, including the current benefit, must consist of agricultural property. Agricultural property consists of farmlands, woodlands, farmhouse, livestock and machinery."

What the feck does this mean in plain english?

If I am to inherit a farm, I have not actually got it yet, so how does the above apply.

J.O. Farmer

tom_tarbucket wrote: »

I just read this article:

http://www.agriland.ie/farming-news/what-are-the-tax-implications-of-leaving-a-farm-worth-e750000/

and I do not understand it........specifically this line:

"In order for the benefciatry to avail of agricultural relief, the test is that more than 80% of their assets, including the current benefit, must consist of agricultural property. Agricultural property consists of farmlands, woodlands, farmhouse, livestock and machinery."

What the feck does this mean in plain english?

If I am to inherit a farm, I have not actually got it yet, so how does the above apply.

It means that after you inherit that 80% of your assets are agricultural. If you haven't inherited yet you don't owe the tax. The tax is only paid after inheritance.

Uncle Mclovin

An example might be best.

Person receives farm with farm assets worth 700k.

Person also has owns a home worth 300k.

i.e total assets after getting farm are 1m.

After receiving the farm the farm equates to 70% of that individuals assets (700k/1m).

They won't qualify for agri relief.


If farm worth 850k and home worth 150k then farm would be 85% of assets and would qualify for agri relief.


Bear in mind this is a very simplified version.

Also if you do not qualify for agri relief you may still qualify for business relief.

rangler1

tom_tarbucket wrote: »

I just read this article:

http://www.agriland.ie/farming-news/what-are-the-tax-implications-of-leaving-a-farm-worth-e750000/

and I do not understand it........specifically this line:

"In order for the benefciatry to avail of agricultural relief, the test is that more than 80% of their assets, including the current benefit, must consist of agricultural property. Agricultural property consists of farmlands, woodlands, farmhouse, livestock and machinery."

What the feck does this mean in plain english?

If I am to inherit a farm, I have not actually got it yet, so how does the above apply.

Basically means that 80% of your assets are farming related after inheriting your farm, ie if you owned a house in dublin worth €400k and inherited a€750000 farm, you wouldn't be eligible for agriculture relief

tom_tarbucket

Uncle Mclovin wrote: »

An example might be best.

Person receives farm with farm assets worth 700k.

Person also has owns a home worth 300k.

i.e total assets after getting farm are 1m.

After receiving the farm the farm equates to 70% of that individuals assets (700k/1m).

They won't qualify for agri relief.


If farm worth 850k and home worth 150k then farm would be 85% of assets and would qualify for agri relief.


Bear in mind this is a very simplified version.

Also if you do not qualify for agri relief you may still qualify for business relief.

thanks. great example.

is there anything else one should be thinking of when inheriting a farm?

tom_tarbucket

rangler1 wrote: »

Basically means that 80% of your assets are farming related after inheriting your farm, ie if you owned a house in dublin worth €400k and inherited a€750000 farm, you wouldn't be eligible for agriculture relief

if the house was in the wifes name, would this change things?

TPF2012

tom_tarbucket wrote: »

if the house was in the wifes name, would this change things?

I doubt it,think you would be considered to own half the house. However the mortgage on your home is taken into account, so if you have 100 thousand left on mortgage, it is taken off the value of house. I could be way wrong here but i think I read this somewhere??

rangler1

tom_tarbucket wrote: »

if the house was in the wifes name, would this change things?

If you don't own it, it's not included in your assets.
If you avail of agriculture relief, you have to keep it for six years or you can sell it and replace it within a year

Grueller

Is the family home included in these calculations.
Say for example my current family home is paid for and mortgage free. I then inherit a farm with a farmhouse on it. I always assumed that my current family home did not come into the calculations.

TPF2012

Grueller wrote: »

Is the family home included in these calculations.
Say for example my current family home is paid for and mortgage free. I then inherit a farm with a farmhouse on it. I always assumed that my current family home did not come into the calculations.

Family home is considered in the calculations as a non- agri asset. However if it is a farmhouse, it is considered an agricultural asset instead.

Grueller

TPF2012 wrote: »

Family home is considered in the calculations as a non- agri asset. However if it is a farmhouse, it is considered an agricultural asset instead.

Just Googled there and have seen that you are right.

tom_tarbucket

How does one value what a farm of land is worth ?

Who does the calculations and how ?

rangler1

Grueller wrote: »

Just Googled there and have seen that you are right.

check out ''business relief'' I think it's the same as agriculture relief without the asset test

rangler1

tom_tarbucket wrote: »

How does one value what a farm of land is worth ?

Who does the calculations and how ?

An auctioneer usually, based on land sales in the area

tom_tarbucket

rangler1 wrote: »

An auctioneer usually, based on land sales in the area

hmmm. Is there any way to do a rough high level valuation of a farm, based on acres, area.

Or a website that would give rough values ?

Grueller

rangler1 wrote: »

check out ''business relief'' I think it's the same as agriculture relief without the asset test

It looks to be. What is the fuss about agricultural relief so? Is there some advantage that I am not seeing?

Username John

Auctioneer does the valuation - as with all things, valuations can vary, so have your sums done prior to any valuations and have an idea as what numbers would be better for you...

If you married, half the house is taken into account.

The mortgage owed on the house is taken off the value of the house (auctioneer values house as well)

You can legally transfer all cash assets to your spouse, for the date that the asset test is applied.

Best to speak with a good solicitor about all this.

Username John

tom_tarbucket wrote: »

hmmm. Is there any way to do a rough high level valuation of a farm, based on acres, area.

Or a website that would give rough values ?

Not that I am aware of - land can range from 5k to 15k dependant on where you are...

Can you work backwards - work out your assets, house etc, get an idea on the the 20%
Then work out what the farm would need to be worth to qualify - divide by acre and see what it comes to...

Again - very much location dept - but if you had that, a call to any local auctioneer would give you an idea if you both in the same ballpark...

tom_tarbucket

So I am the only son in my family and am due to inherit the land.

I work a full time job where I do long enough hours, on call, work at weekends etc. Also have a young family.

Being honest, I don't think there is a farmer in me. I grew up on the farm, and being the only son worked every day on it etc etc. I still help out about once a week or when needed. But my knowledge of the day to day running of a farm or even basic stuff like, when do I put fertiliser out, when should I buy cattle, when should I dose cattle, etc is non existent. As for farm paperwork, not a breeze. And the honest reason for this is probably because I have no interest in it.and because I have seen what a struggle it is to survive in it and no holidays, no guaranteed pay packet each month etc. Tis a small enough farm to be honest

And being Irish with closed emotions and not really openly talking about things etc, I have never really talked about all this or had it out with the parents as to what will happen when I get the land.

However. I would still like to keep the farm to keep the name alive. Maybe let it etc. Maybe in a few years from now, things will change and I might be mad to have a bit of dry stock.

So that's my story.
with all this said. Is there any tricks of the trade that I can do to inherit the land without having to pay the taxman a fortune.

Uncle Mclovin

Have you received any gifts from your parents prior to this inheritance? If not then if the value of the land is small and assuming you qualify for agri relief/business relief you probably won't have any tax to pay on inheritance as your CAT threshold of 280k (gone up to 310k in budget) will more than likely cover it.

I'd get tax advice though if I were you before you get the inheritance.

Also if you lease the land there is good tax breaks available.

See link below:

http://www.revenue.ie/en/tax/it/reliefs/leasing-farm-land.html

tom_tarbucket

Uncle Mclovin wrote: »

Have you received any gifts from your parents prior to this inheritance? If not then if the value of the land is small and assuming you qualify for agri relief/business relief you probably won't have any tax to pay on inheritance as your CAT threshold of 280k (gone up to 310k in budget) will more than likely cover it.

I'd get tax advice though if I were you before you get the inheritance.

Also if you lease the land there is good tax breaks available.

See link below:

http://www.revenue.ie/en/tax/it/reliefs/leasing-farm-land.html

Thanks. No, I have not received any gifts from the parents.

Now in saying all this, I may not inherit the farm for years yet.

I doubt I'll qualify for the relief.

tom_tarbucket

tom_tarbucket wrote: »

So I am the only son in my family and am due to inherit the land.

I work a full time job where I do long enough hours, on call, work at weekends etc. Also have a young family.

Being honest, I don't think there is a farmer in me. I grew up on the farm, and being the only son worked every day on it etc etc. I still help out about once a week or when needed. But my knowledge of the day to day running of a farm or even basic stuff like, when do I put fertiliser out, when should I buy cattle, when should I dose cattle, etc is non existent. As for farm paperwork, not a breeze. And the honest reason for this is probably because I have no interest in it.and because I have seen what a struggle it is to survive in it and no holidays, no guaranteed pay packet each month etc. Tis a small enough farm to be honest

And being Irish with closed emotions and not really openly talking about things etc, I have never really talked about all this or had it out with the parents as to what will happen when I get the land.

However. I would still like to keep the farm to keep the name alive. Maybe let it etc. Maybe in a few years from now, things will change and I might be mad to have a bit of dry stock.

So that's my story.
with all this said. Is there any tricks of the trade that I can do to inherit the land without having to pay the taxman a fortune.

Ive managed to bare my soul to the internet but not my parents ! its on a par with someone that is "coming out"

Anyone else in a similar situation to me ?

MD1983

Grueller wrote: »

It looks to be. What is the fuss about agricultural relief so? Is there some advantage that I am not seeing?

business relief does not apply to a farmhouse and likely not forestry (depending on the scale of the forestry activity). there are other differences such as business relief requires the disponer to have carried on a farming business (rather than say renting the land out) for 5 years in the case of a gift and 2 years in the case of an inheritance. what the disponer did with the land (farmed or rented) does not matter for ag relief

leasing the land out post receipt of the gift or inheritance is not possible with business relief whereas it is with ag relief (subject to conditions of course) so you would have to farm it yourself

there are a good few nuances to the reliefs so take good advice e.g. it is little known that ag relief would not apply to a person who inherited cut crops (say a shed of hay/straw) as part of an overall farm inheritance so the value of the cut crops would not qualify for ag relief (but it would qualify for business relief)

Grueller

MD1983 wrote: »

business relief does not apply to a farmhouse and likely not forestry (depending on the scale of the forestry activity). there are other differences such as business relief requires the disponer to have carried on a farming business (rather than say renting the land out) for 5 years in the case of a gift and 2 years in the case of an inheritance. what the disponer did with the land (farmed or rented) does not matter for ag relief

leasing the land out post receipt of the gift or inheritance is not possible with business relief whereas it is with ag relief (subject to conditions of course) so you would have to farm it yourself

there are a good few nuances to the reliefs so take good advice e.g. it is little known that ag relief would not apply to a person who inherited cut crops (say a shed of hay/straw) as part of an overall farm inheritance so the value of the cut crops would not qualify for ag relief (but it would qualify for business relief)

Under all of those things listed business relief and again relief would be the same thing for me. Will deformation be taking advice at the appropriate time though.