Taking over farm question

galway1976

Hi Guys, well my dad has decided to sign over the farm, I am 40 yrs old and I have no green cert. The question is do I need it. Will I be able to get grants without it. I do intent on doing the green cert in a year or two. But for now with 4 small kids and a full time job it isnt an option. I have been told I wont be able to receive the single farm payment etc. Its a small farm about 60 acres of middle of the road land. Any advice would be much appreciated .

DEUTZ1507

No no S.F.P
Just area aid

_Brian

DEUTZ1507 wrote: »

No no S.F.P
Just area aid

Why no sfp??

DEUTZ1507

You have none built up

galway1976

DEUTZ1507 wrote: »

You have none built up

I thought the auld lads would transfer over

Water John

Need to get good advice.Both Solr and Acc. Make sure you qualify for Farm Relief on Capital Acquisition Tax, first. sounds like you may not, unless you plan this move carefully.

galway1976

Water John wrote: »

Need to get good advice.Both Solr and Acc. Make sure you qualify for Farm Relief on Capital Acquisition Tax, first. sounds like you may not, unless you plan this move carefully.

Thanks John. We are looking for both at the moment. It seems like a mind field and complicated.

DEUTZ1507

Only qualify for farm relief on CAT .If 80% of you income is derived from agri

TPF2012

DEUTZ1507 wrote:

Only qualify for farm relief on CAT .If 80% of you income is derived from agri

Not income. 80% of assets including the farm that is been transferred.

Water John

Not sure on the limits. 80% sounds high to me. (Commenting on the income treshold suggested.) I think you have to farm 20 hours per week ie half time.
Time to ask the professionals. Possibly leasing it to a qualifying farmer may get you across the line.

DEUTZ1507

But to qualify, you have to either lease the land to a full time farmer for 6 years
Or farm it your self and not sell it for 6 years provided you meet the criteria

galway1976

DEUTZ1507 wrote: »

Only qualify for farm relief on CAT .If 80% of you income is derived from agri

I thought that the farm had to be over 80% of your assets to be classed as a farmer and then entitled to cat relief

DEUTZ1507

so dose your income

DEUTZ1507

Or else lease it for 6 years to farmer

DEUTZ1507

Its just to stop people availing of the relief and the selling the land on for profit

Water John

Yes, it's 80% of assets. But I think the issue of % time working the farm comes into account also, the 20 hours per week.
The Alt is leasing to a qualifying farmer. I presume the lease income would be tax exempt. worth considering, depending on your circumstances.

DEUTZ1507

Yes tax exempt'
Plus you not worrying will you be left with a big tax bill down the road

galway1976

Water John wrote: »

Yes, it's 80% of assets. But I think the issue of % time working the farm comes into account also, the 20 hours per week.
The Alt is leasing to a qualifying farmer. I presume the lease income would be tax exempt. worth considering, depending on your circumstances.

no I want to farm it. Dad had no intention of handing it over until lately, I didnt think he would let it go for another 10 years, saying that he will still be there with me as hes still only 67 (long may it last)

DEUTZ1507

ye go 50:50
At least you will still get all your grants
Plus you wont be taxed at 40% for your farm profit.

galway1976

DEUTZ1507 wrote: »

ye go 50:50
At least you will still get all your grants
Plus you wont be taxed at 40% for your farm profit.

Will have to look into that. Never crossed my mind

DEUTZ1507

Ya the tax is the biggest issue when you on the second income..
Its hardly worth the work
That is why a lease or forestry are attractive options

Water John

That is why it is important to plan this. All choices to be on the table. I see your father is probably now in receipt of a pension.
No harm in kicking the ball around and hearing diff views. But, don't jump until the plan is complete.
I know this Green Cert is proving a right pain for those who have a full time job.

DEUTZ1507

You can do it online if you have a 3rd level

galway1976

DEUTZ1507 wrote: »

You can do it online if you have a 3rd level

Ya looked into it and its full for this year

galway1976

Water John wrote: »

That is why it is important to plan this. All choices to be on the table. I see your father is probably now in receipt of a pension.
No harm in kicking the ball around and hearing diff views. But, don't jump until the plan is complete.
I know this Green Cert is proving a right pain for those who have a full time job.

I agree. Its just to find the right accountant and solicitor

kowtow

DEUTZ1507 wrote:

so dose your income

There is no income test for qualification. If there is nobody would qualify.

It's assets and hours, 80% of your assets must be farm after the transfer.

And there's an active farmer test expressed as 'hours a week', the green cert removes that I think.

This is because on the green cert they teach you to do things more efficiently so you would never have to spend more than 20 minutes a week at farming even on the largest dairy.

Suckler

DEUTZ1507 wrote: »

You can do it online if you have a 3rd level

galway1976 wrote: »

Ya looked into it and its full for this year

Have either of you details on the course you refer to? Can you PM me, don't want to drag the chat off in a different direction.

rangler1

kowtow wrote: »

There is no income test for qualification. If there is nobody would qualify.

It's assets and hours, 80% of your assets must be farm after the transfer.

And there's an active farmer test expressed as 'hours a week', the green cert removes that I think.

This is because on the green cert they teach you to do things more efficiently so you would never have to spend more than 20 minutes a week at farming even on the largest dairy.

You can lease the farm to a qualified farmer, but whoever farms it, whether you or your leasee, must be more than a part time farmer.

Red Sheds

For OP, there are too many different views on the farm relief here for you. Best is get an accountant and solicitor to work it out for you in advance and then plan what you need to do to qualify for it. I went through the same in the last 2 years and there is an assets limit, I think its 80% of your total assets must be agricultural assets (e.g. land, machinery etc) after the transfer. I had to transfer a lot of assets away to qualify. Cant remember if the family home is included or not. I dont remember an income limit, unless its new as I would not have qualified there. There is a rule that you must spend at least 20 hours per week farming, in other words its a significant part of your working time, and any farm can absorb that amount of time. My advice, do this carefully and slowly and make sure everything is going to stack up before you do the transfer because you will have only one shot at that. Best of luck with it.

On the SFP I was able to get my aul lads as well with transfer of the hard number and was same age as you with no green cert. You could technically buy the entitlements from him also.

topaha

DEUTZ1507 wrote: »

so dose your income

income doesn't come into it.

rangler1

Might be some help to you.

http://www.revenue.ie/en/tax/cat/leaflets/cat5.html

Water John

Kowtow and Red Sheds have got it about right. Use an Acc that works a lot in the farming area. Be careful with Solr, get good local recommendations.
Nowadays, your father needs his own.

What Rangler has up should help too. Best of luck.

OverRide

kowtow wrote: »

This is because on the green cert they teach you to do things more efficiently so you would never have to spend more than 20 minutes a week at farming even on the largest dairy.

rangler1

It's poor form that the allowances for farm transfer isn't the same for whoever inherits a farm as poor and restricting as they are.
Whoever gets my farm will start with a financial noose round their neck as i've no close relatives interested

topaha

From Revenue Website, This the first criterion you must meet:-

What is a 'Farmer'?

To qualify for agricultural relief, the person receiving the gift or inheritance must be a 'farmer' at the Valuation Date.

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.

Depending what assets you have you might need to transfer some to your wife and/or kids before any land transfer. Bear in mind any machinery/sheds/cattle/entitlements are counted as assets (if your ould fella intends to transfer any of these to you). Equity in your house, savings, car etc. etc. would all be classed as assets so, as mentioned above you'd need to sit down with an accountant to check these through.

First things first, get the farm valued so you'll have a better idea of what you're looking at having to dispose of to be comfortably meet the 80% rule.

Provided you can meet the 80% Rule then you're looking to get the CAT Relief (90%) write down on the value of assets you're acquiring). To meet this:-

The beneficiary must:

Farm the agricultural property for a period of not less than 6 years commencing on the valuation date or
Lease the agricultural property for a period of not less than 6 years commencing on the valuation date. The agricultural property may be leased to a number of lessees as long as each lease and lessee satisfies the conditions of the relief.
In addition, the beneficiary (or the lessee, where relevant) must:

Have an agricultural qualification (a qualification of the kind listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999) or
Farm the agricultural property for not less than 50% of his or her normal working time. (20hrs as confirmed by Michael Noonan in budget 2014)
The agricultural property must also be farmed on a commercial basis and with a view to the realisation of profits.

So if you intend farm it yourself you'll have to get the green cert to avoid CAT, (unless the farm is valued at less than €280,000, in which case it would be under the capital allowance threshold) or lease it to someone with a green cert thats farming for profit.

Its all aimed at getting farmland into the hands of people who are farming productively, and not allowing agricultural relief to people who have no interst in farming unless they lease it to someone who is interested in it. Thats why all the talk these days from Michael Noonan and the other politicians in relation to grants and reliefs etc is about 'Young Trained Farmers'.

Water John

Well Rangler, you could get some one under the preferred nephew status. Could be some one to give you a helping hand. Don't want to interfere in your personal business.

rangler1

Water John wrote: »

Well Rangler, you could get some one under the preferred nephew status. Could be some one to give you a helping hand. Don't want to interfere in your personal business.

They all are set up in their own lives or around the world

Water John

TMK 'preferred nephew' doesn't actually have to be related to you.

The Japanese actually sometimes use adult adoptions. The head of Toyota did that.

rangler1

Water John wrote: »

TMK 'preferred nephew' doesn't actually have to be related to you.

The Japanese actually sometimes use adult adoptions. The head of Toyota did that.

Didn't know that, some good young lads around here strangled renting poor land, could be the way to go

Water John

I think they would have had to be helping you significantly for 5 years. Don't know where I'm digging this info up from in the past.

Might be a win/win.

Muckit

rangler1 wrote: »

It's poor form that the allowances for farm transfer isn't the same for whoever inherits a farm as poor and restricting as they are.
Whoever gets my farm will start with a financial noose round their neck as i've no close relatives interested

It is very sad indeed. Inheritance and farm transfer l feel are the single biggest issues on farms after say poor returns. Yet it isn't being flagged by the dept of Ag/teagasc etc half strong enough. They should do away with half these farm walks and replace them with farm talks. Talks about how best to approach farm transfers etc and all the options available.

A neighbouring farm was sold off recently. None of their kids wanted to farm and as he said himself he mightn't be able to drive in 5-10 years time. They are moving to the town. There comes a time when everyone has to think about themselves. In another way l felt he was thinking about his family as he and his wife will be more independent for longer and won't be having to try bum lifts etc off his family.

There are huge similarities between childhood and old age. As one gets older we become more dependent. I just hope the Good Lord takes me before I'm in nappies again.

patsy_mccabe

If you don't qualify for Agriculture Relief (not a trained farmer under 35 years)you can qualify for Business Relief, which is basically the same thing. The value of the farm is reduced by 90% for consideration under Capital Acquisitions Tax. So in effect you can have €2.5M (need to check this) of a farm transferred over to you without paying any tax.
There are some conditions like you can't sell within 5 years etc etc, but they are all workable.

I'd strongly advise that you go talk to a tax expert.;)

As a tax expert said to me once - 'The revenue is not in the business of breaking up viable businesses'. Why would they? They will get income tax from you over the years.

http://www.revenue.ie/en/tax/cat/leaflets/cat5.html#section6

topaha

I completed the Green Cert (via distance learning) this summer, in one of the books that are part of the course there is the following in relation to favourite niece/nephew:-

To qulaify as a favourite nephew/niece the nephew/niece must be:

(i) A blood nephew/niece
(ii) Get the farm as a gift or inheritance
(iii) Have worked for more than 15hrs per week on the farm of the uncle or aunt for a period of 5 years prior to the transfer of the property OR have worked 24 hrs per week for a period of 5 years where farming is not carried out exclusively by the land owner and their spouse i.e where other family labour or hired labour is used.
(iv) Receive an income from the farming.

kowtow

topaha wrote: »

From Revenue Website, This the first criterion you must meet:-

What is a 'Farmer'?

To qualify for agricultural relief, the person receiving the gift or inheritance must be a 'farmer' at the Valuation Date.

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.

Depending what assets you have you might need to transfer some to your wife and/or kids before any land transfer. Bear in mind any machinery/sheds/cattle/entitlements are counted as assets (if your ould fella intends to transfer any of these to you). Equity in your house, savings, car etc. etc. would all be classed as assets so, as mentioned above you'd need to sit down with an accountant to check these through.

First things first, get the farm valued so you'll have a better idea of what you're looking at having to dispose of to be comfortably meet the 80% rule.

Provided you can meet the 80% Rule then you're looking to get the CAT Relief (90%) write down on the value of assets you're acquiring). To meet this:-

The beneficiary must:

Farm the agricultural property for a period of not less than 6 years commencing on the valuation date or
Lease the agricultural property for a period of not less than 6 years commencing on the valuation date. The agricultural property may be leased to a number of lessees as long as each lease and lessee satisfies the conditions of the relief.
In addition, the beneficiary (or the lessee, where relevant) must:

Have an agricultural qualification (a qualification of the kind listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999) or
Farm the agricultural property for not less than 50% of his or her normal working time. (20hrs as confirmed by Michael Noonan in budget 2014)
The agricultural property must also be farmed on a commercial basis and with a view to the realisation of profits.

So if you intend farm it yourself you'll have to get the green cert to avoid CAT, (unless the farm is valued at less than €280,000, in which case it would be under the capital allowance threshold) or lease it to someone with a green cert thats farming for profit.

Its all aimed at getting farmland into the hands of people who are farming productively, and not allowing agricultural relief to people who have no interst in farming unless they lease it to someone who is interested in it. Thats why all the talk these days from Michael Noonan and the other politicians in relation to grants and reliefs etc is about 'Young Trained Farmers'.

Note that the "active farmer" provision (the 20 hours a week requirement, roughly speaking) is an alternative to the green cert, you require one or the other but not both.

It is provided as a "get out" for those horny handed sons of toil amongst us who lack the educational aptitude to obtain the relevant farming qualification from an appropriate state body.

Water John

Topaha and Rangler, apologies if I am wrong there. This was from memory.

topaha

patsy_mccabe wrote: »

If you don't qualify for Agriculture Relief (not a trained farmer under 35 years)you can qualify for Business Relief, which is basically the same thing. The value of the farm is reduced by 90% for consideration under Capital Acquisitions Tax. So in effect you can have €2.5M (need to check this) of a farm transferred over to you without paying any tax.
There are some conditions like you can't sell within 5 years etc etc, but they are all workable.

I'd strongly advise that you go talk to a tax expert.;)

As a tax expert said to me once - 'The revenue is not in the business of breaking up viable businesses'. Why would they? They will get income tax from you over the years.

http://www.revenue.ie/en/tax/cat/leaflets/cat5.html#section6

The age limit (i.e 35yrs of age) is only relevant to the stamp duty, not CAT. I didn't mention it in my post as the OP is 40 so he's gonna have to pay it. Its only 1% anyway so not necessarily prohibitive to the whole transfer.

topaha

Water John wrote: »

Topaha and Rangler, apologies if I am wrong there. This was from memory.

It was only after you mentioned the favourite nephew thing that i remembered i'd sent a photo of what i'd typed above to my uncle:)!!

PS - he doesn't actually have anything to give me anyway, it just came up in conversation..

topaha

kowtow wrote: »

Note that the "active farmer" provision (the 20 hours a week requirement, roughly speaking) is an alternative to the green cert, you require one or the other but not both.

It is provided as a "get out" for those horny handed sons of toil amongst us who lack the educational aptitude to obtain the relevant farming qualification from an appropriate state body.

Correct.

Here's where i get a bit vague on grants etc.Would the green cert be of any benefit then in getting the grant in this term of TAMS say?

I've needed it to get the 60% grant but i'm a new entrant in my 30's. Does the OP, at 40, qualify for new entrant intiatives? and would they therefore need the green cert or are they 'overage' now so it'd be a bit pointless?

As for the Green Cert itself, its a bit more of an undertaking than its made out to be. the group that started in january '16 have to do 25 contact days in their local ag college at a cost of €2,500 over a course of 18 months. Plenty paperwork and diaries to be kept outside of that too.

TPF2012

kowtow wrote:

Note that the "active farmer" provision (the 20 hours a week requirement, roughly speaking) is an alternative to the green cert, you require one or the other but not both.

How does one prove to Revenue that you have attained the 20 hours a week. I read that the onus is on the individual to provide evidence to Revenue that this 20 hours requirement has been fulfilled.

kowtow

topaha wrote: »

Correct.

Here's where i get a bit vague on grants etc.Would the green cert be of any benefit then in getting the grant in this term of TAMS say?

I've needed it to get the 60% grant but i'm a new entrant in my 30's. Does the OP, at 40, qualify for new entrant intiatives? and would they therefore need the green cert or are they 'overage' now so it'd be a bit pointless?

As for the Green Cert itself, its a bit more of an undertaking than its made out to be. the group that started in january '16 have to do 25 contact days in their local ag college at a cost of €2,500 over a course of 18 months. Plenty paperwork and diaries to be kept outside of that too.

With the limited exception of some of the National Reserve (and Scottish derogation) schemes I'm not sure that there is any incentive for a new entrant who is not also young.

I am - or was - a new entrant over 40, have no intention of getting a green cert, or for that matter using any grant schemes, but I'm fairly sure that there was no 60% TAMS or additional incentive available over and above what any farmer could have got.

kowtow

TPF2012 wrote: »

How does one prove to Revenue that you have attained the 20 hours a week. I read that the onus is on the individual to provide evidence to Revenue that this 20 hours requirement has been fulfilled.

In my case every time I take off a pair of milking gloves I pop them in a big jiffy envelope, along with the used filter sock.