Succession......lost

893bet

Hi,
We are planning to transfer the farm from my father to me this year all going to plan. We have left it too late to be honest. I am mid 30's and my father is almost 80. Health is deteriorating to a degree.

I have no farm qualifications and no time to be honest (currently 90 minutes each way).



I have many questions.



1) Who do we need to engage with to start the process as we really don't know where to start? What type of professionals? Teagasc advisor and an accountant? Looking to transfer to me and lease out as such.

I should be able to meet the agri relief limit for transferring.



2) Taxation.
My off farm income would be relatively high so not sure how we can work it so that it is tax efficient. Prefer not to lease it out while my father is alive but realistically it is the only option (small farm 25 or so hectares of marginal land plus maybe 15 hecteres. Currently carrying 12-15 cows + 12-15 calves at foot+ 12-15 weanlings.


2a) Is leasing the land Tax free if to an active farmer? Is there a cap on how much tax free?


2b) We have fairly good entitlements on the 25 hect. Around 6K per year. Is this typically leased to a separate person or the same person who would take the land acreage? Is this tax free?


2c) We are in a disadvantaged areas. If leased I assume its up to the person leasing the land to claim this and we charge accordingly?


2d) Farm is very fragmented so likely need multiple leases. Does this make it much more complicated in general?

bogman_bass

Talk to your solicitor and your accountant

Who2

You could go business transfer instead of agri. You do need to look at farming for six years after transfer or leasing to a young trained farmer can work. You need a solicitor of your own a separate one for your father and I’d recommend going to an Ifac accountant to go through the tax implications

893bet

Can you clarify the difference between business transfer instead of agri?

Is a teagasc advisor any good at this point?

Who2

893bet wrote: »

Can you clarify the difference between business transfer instead of agri?

Is a teagasc advisor any good at this point?

It has to be the complete farm, machinery animals and everything as a going concern and ran as such for the following 6 years. I’m not the best versed in how it works but it’s definitely worth a look. An ifac accountant is a must imo. I use two different accountants but neither knew the ins and outs of the system like the ifac lad.

L1985

Just two things-it takes a lot longer then you think and make sure the solicitors quote you the price before you go with them as the difference can be extortionate. good luck with it and make sure you have a good accountant!!

jimini0

Tell us what part of the country your in and people can point you in the right direction. They may know people in the area that are good in these situations

Bass Reeves

If you have no afrming qualifiaction and do not intend to get one it may be as advantageous for your father to leave it to you in his will.

Pkiernan

Might there also be 6% stamp duty payable if transferred rather than inherited?

893bet

Leaving it to me in the will puts it at risk of the "fair deal" scheme.

Is there any advantage to doing the green cert to add transfer in a tax efficient manner at this point either through reduction of stamp duty or qualifying for agricultural relief re value? I am over 35 if that makes a difference.

893bet

If you qualify for agricultural relief (i.e. reduce the value by 90%) is the stamp then only due on that reduced amount?

Pkiernan

893bet wrote: »

Leaving it to me in the will puts it at risk of the "fair deal" scheme.

Is there any advantage to doing the green cert to add transfer in a tax efficient manner at this point either through reduction of stamp duty or qualifying for agricultural relief re value? I am over 35 if that makes a difference.

Selling or otherwise transferring to property to you doesn't mean you're immune to the fair deal scheme. You need to talk to an estate planner or accountant.

foxirl

893bet wrote: »

If you qualify for agricultural relief (i.e. reduce the value by 90%) is the stamp then only due on that reduced amount?

Stamp duty is on the whole amount but you will only have to pay 1% due to Consanguinity Relief. Ie you are related. Where abouts in country are you.
To get agricultural relief you need to farm our lease it for 6 years. Doesn't have to be to young farmer. Went though similar fairly recently and can recommend someone if you are in the Midwest

893bet

Pkiernan wrote: »

Selling or otherwise transferring to property to you doesn't mean you're immune to the fair deal scheme. You need to talk to an estate planner or accountant.

Understood but they only look back 5 or so years.

893bet

foxirl wrote: »

Stamp duty is on the whole amount but you will only have to pay 1% due to Consanguinity Relief. Ie you are related. Where abouts in country are you.
To get agricultural relief you need to farm our lease it for 6 years. Doesn't have to be to young farmer. Went though similar fairly recently and can recommend someone if you are in the Midwest

Limerick area. So the right location.

Please PM the recommendation.

foxirl

893bet wrote: »

Limerick area. So the right location.

Please PM the recommendation.

PM sent. Sorry for delay

trg

How'd you get on with this @893bet?

893bet

trg wrote: »

How'd you get on with this @893bet?

No progress yet. Still gathering info. Will be meeting our own accountant in the next week or so to complete my wife and I's accounts aswell as my fathers farm accounts so will be having a conversation then. Will engage a separate farm accountant also though.





@ everyone


When you are making the calculation for 80% farming assets after transfer are all the below considered farming assets?



Land
Planted land
Stock
Sheds
Machinery
Entitlements
Farm house (which powers and supplies water to the farm).

Cavanjack

893bet wrote: »

No progress yet. Still gathering info. Will be meeting our own accountant in the next week or so to complete my wife and I's accounts aswell as my fathers farm accounts so will be having a conversation then. Will engage a separate farm accountant also though.




@ everyone


When you are making the calculation for 80% farming assets after transfer are all the below considered farming assets?



Land
Planted land
Stock
Sheds
Machinery
Entitlements
Farm house (which powers and supplies water to the farm).

Yes they are all farm assets. If the house is transferred with the land it is considered agricultural. If it's transferred at a later date it is not.

Bass Reeves

Bass Reeves wrote: »

If you have no afrming qualifiaction and do not intend to get one it may be as advantageous for your father to leave it to you in his will.

Aside from the stamp duty it makes little difference. He still won’t be able avail of agri relief himself unless he does the green cert and only option will be rent it out to a young trained farmer or pay a very large tax bill.

893bet

Canaan Enough Wishbone wrote: »

Aside from the stamp duty it makes little difference. He still won’t be able avail of agri relief himself unless he does the green cert and only option will be rent it out to a young trained farmer or pay a very large tax bill.

Do I need to have the green cert done to get the 90% relief? I understand I don’t need it for that?

wrangler

893bet wrote: »

Do I need to have the green cert done to get the 90% relief? I understand I don’t need it for that?

The person thats farming it needs an agricultural qualification, That can be you or your tenant

893bet

893bet wrote: »

Do I need to have the green cert done to get the 90% relief? I understand I don’t need it for that?

Either you or the person you lease the farm to need a qualification to qualify (normally the green cert).

The green cert has a number of benefits most of which only apply to the under 40’s but ultimately the only reason the majority actually do it is to qualify for the agri relief and for this you will see people in their 40’s and maybe even 50’s doing it.

893bet

The below is from the revenue website.

Additionally, the person receiving the gift or inheritance, or the person leasing the property must either:

have an agricultural qualification (as listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999)

farm the agricultural property for at least 50% of his or her normal working hours.

The 50% hours thing seems easy enough meet and negates need for greencert (I am doing the very but not starting till September and won’t be finished till early 2021 I think do dont want that to be a factor.

roosterman71

893bet wrote: »

farm the agricultural property for at least 50% of his or her normal working hours.

The 50% hours thing seems easy enough meet and negates need for greencert (I am doing the very but not starting till September and won’t be finished till early 2021 I think do dont want that to be a factor.

Just so my calculations are clear, to meet that point, if you work off farm for 40 hours a week, you must work on the farm for another 40 to meet the "at least 50% of ... normal working hours"?

893bet

roosterman71 wrote: »

Just so my calculations are clear, to meet that point, if you work off farm for 40 hours a week, you must work on the farm for another 40 to meet the "at least 50% of ... normal working hours"?

That’s the worst case interpretation.

I don’t see how anyone can prove otherwise if this is a self declaration.

wrangler

893bet wrote: »

That’s the worst case interpretation.

I don’t see how anyone can prove otherwise if this is a self declaration.

Like all self declarations they're great until you have an audit.
As it's reducing your tax by hundreds of thousands it probably won't be let through easily

893bet

893bet wrote: »

The below is from the revenue website.

Additionally, the person receiving the gift or inheritance, or the person leasing the property must either:

have an agricultural qualification (as listed in Schedule 2, 2A or 2B of the Stamp Duties Consolidation Act 1999)

farm the agricultural property for at least 50% of his or her normal working hours.

The 50% hours thing seems easy enough meet and negates need for greencert (I am doing the very but not starting till September and won’t be finished till early 2021 I think do dont want that to be a factor.

I don’t think this is correct, as far as I’m aware even if you are a full time farmer you still need the green cert to qualify. I’ve been to many information evenings etc in succession etc and the green cert is always a must on any list.

There is no way the 100’s of people doing distance green certs at 2.5k a pop would be doing so if they didn’t absolutely have to or if the above interpretation is correct.

There are other rules to meet also to get agri relief that you need to be careful of, one big one is that 80% or your assets must be agricultural. So for example: If the farm is worth 1m you can’t own non agri property worth more than 200k on the day of receiving the farm, very easy to fail this test if you own a house in a city etc.

Sacrolyte

That’s why it’s there. So farmers can benefit and not non agricultural people.

Sacrolyte

Sacrolyte wrote: »

That’s why it’s there. So farmers can benefit and not non agricultural people.

Lots of people who plan to take over a farm would have purchased a property to live in themselves/with their family or even an investment property long before they would be set to get the farm in their name, cash savings also count as an asset as far as I’m aware also so I think overall it’s a rule that’s pretty unfair on many people.

I’ve know at least one person who had to sign a house over fully to their wife in order to get under the threadhold, it’s fair fiddling bit it can be done.

Luckily if you build on the farm and will be taking over the farm then it should be possible to get the house classed as the farm house according to one information evenings so those of us going down that route should be ok thought I’ve yet to see this clarified. It’s also worth nothing that its the house value less mortgage owed that’s taken as the asset value so those with small mortgages or owning outright are at a disadvantage.

893bet

I am booked to start cert in September either way so that won’t be a factor.

Is planted land considered for agricultural relief for definite?

Cavanjack

roosterman71 wrote: »

Just so my calculations are clear, to meet that point, if you work off farm for 40 hours a week, you must work on the farm for another 40 to meet the "at least 50% of ... normal working hours"?

No if You work off farm for 40 hours you must do 20 on the farm per week.

wrangler

Cavanjack wrote: »

No if You work off farm for 40 hours you must do 20 on the farm per week.

If you're working off farm 40hrs/wk you'll need to show an enterprise that justifies 40hrs /wk on the farm as well.

Bass Reeves

If you work fulltime you work about 46 weeks/ year net. Like all stupid rules it discriminates against PAYE workers.If you are self employed you can ignore it. For public servants again it is very doable. If not you need to average 35 hours/week to counter a 40 hour week.

Cavanjack

wrangler wrote: »

If you're working off farm 40hrs/wk you'll need to show an enterprise that justifies 40hrs /wk on the farm as well.

Nothing to say you can't cut your silage with a lawnmower to clock in a few extra hours