Inheritance from Grandfather

patsy_mccabe

Anyone know how a farm can be transferred from a grandfather to grandson tax efficiently?
Grandfather is very sick at the moment and grandson is working the farm for him. He's a young relative of mine and I want to point him in the right direction. He has enough on his plate at the moment and he's stressed over it all.

I know he can go talk to a solicitor or tax expert, but I know from experience that its good to have an idea whats involved in advance.

893bet

I assume it can be avoided using the same mechanism as “favourite nephew”?

Dinzee Conlee

I don’t know if favourite nephew would apply - they don’t state grandchildren on revenue. Would need to check with someone who knows... Definitely worth following up...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/favourite-nephew-or-niece-relief/index.aspx

Agriculture relief could come into play - be good to familiarise yourself with these before you talk to anyone...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/agricultural-relief/what-are-the-conditions-for-agricultural-relief.aspx

Might be worth looking into not going from grandfather to grandson, but grandfather to father/mother and then grandson.

Different thresholds come into play when inheriting from grandfather vs parent...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-and-group-thresholds.aspx

If you were to go grandfather to father to grandson - stamp duty would be payable on the second transfer I think...
https://www.revenue.ie/en/property/stamp-duty/gifts-and-inheritances/inheritances.aspx

JeffKenna

Is the grandsons father still alive?

wrangler

Dinzee Conlee wrote: »

I don’t know if favourite nephew would apply - they don’t state grandchildren on revenue. Would need to check with someone who knows... Definitely worth following up...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/favourite-nephew-or-niece-relief/index.aspx

Agriculture relief could come into play - be good to familiarise yourself with these before you talk to anyone...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-reliefs/agricultural-relief/what-are-the-conditions-for-agricultural-relief.aspx

Might be worth looking into not going from grandfather to grandson, but grandfather to father/mother and then grandson.

Different thresholds come into play when inheriting from grandfather vs parent...
https://www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-and-group-thresholds.aspx

If you were to go grandfather to father to grandson - stamp duty would be payable on the second transfer I think...
https://www.revenue.ie/en/property/stamp-duty/gifts-and-inheritances/inheritances.aspx

I know someone that was allowed the favourite nephew allowance even though they were no relation but had worked with the owner for year

patsy_mccabe

JeffKenna wrote: »

Is the grandsons father still alive?

Thanks for the replies.
It's his mother's father's farm. He reckons it would be easier to do tru an uncle, it that's whats required.
I knew about the 'favourite nephew' clause.

There's a house too. Does that come under the farm or is it treated seperately?

I assume consanguinity relief is out of the qs,person transferring need to be under 67 or so

trg

patsy_mccabe wrote: »

Thanks for the replies.
It's his mother's father's farm. He reckons it would be easier to do tru an uncle, it that's whats required.
I knew about the 'favourite nephew' clause.

There's a house too. Does that come under the farm or is it treated seperately?

Patsy, I genuinely think your wasting your time here asking those questions on what is a farming forum.

Go to a farm tax expert and get their advice.

What you're asking is very specific, you'll never be able to give full picture here and posters with the best will in the world are simply incorrect in some assumptions and assertions.

JeffKenna

patsy_mccabe wrote: »

Thanks for the replies.
It's his mother's father's farm. He reckons it would be easier to do tru an uncle, it that's whats required.
I knew about the 'favourite nephew' clause.

There's a house too. Does that come under the farm or is it treated seperately?

Ah ok, I was going down the road that a grandparent can gift to a grandchild as a parent if the child's parent is deceased.

If it's the mother father's farm I'd be inclined to put it into her name number 1 (but she would have to qualify as a farmer for that) and then long term lease it for 7 years. Same principle would apply for the favourite nephew. I guess the individuals wealth and ability to pass the 80/20 would be the big factor there.

House would be considered as part of the farm yes.

LawBoy2018

JeffKenna wrote: »

Ah ok, I was going down the road that a grandparent can gift to a grandchild as a parent if the child's parent is deceased.

If it's the mother father's farm I'd be inclined to put it into her name number 1 (but she would have to qualify as a farmer for that) and then long term lease it for 7 years. Same principle would apply for the favourite nephew. I guess the individuals wealth and ability to pass the 80/20 would be the big factor there.

House would be considered as part of the farm yes.

That's a bit dodgy though and could lead to issues down the line if the son fell out with his mother/siblings.

JeffKenna

LawBoy2018 wrote: »

That's a bit dodgy though and could lead to issues down the line if the son fell out with his mother/siblings.

That's why I put the mother number 1. Would have to be trust there.

LawBoy2018

JeffKenna wrote: »

That's why I put the mother number 1. Would have to be trust there.

What do you mean 'mother number one'? If it's left to his mother, she could then decide to bequeath the property however she liked.

JeffKenna

LawBoy2018 wrote: »

What do you mean 'mother number one'? If it's left to his mother, she could then decide to bequeath the property however she liked.

Indeed she could

patsy_mccabe

trg wrote: »

Patsy, I genuinely think your wasting your time here asking those questions on what is a farming forum.

Go to a farm tax expert and get their advice.

What you're asking is very specific, you'll never be able to give full picture here and posters with the best will in the world are simply incorrect in some assumptions and assertions.

Oh, I agree and I did say that in the first post. I can't get involve, but he has asked me for advice. He just seems confused and stressed over everything. I'd just like to have some ideas in his head when he talks to a solicitor.

Dinzee Conlee

patsy_mccabe wrote: »

Thanks for the replies.
It's his mother's father's farm. He reckons it would be easier to do tru an uncle, it that's whats required.
I knew about the 'favourite nephew' clause.

There's a house too. Does that come under the farm or is it treated seperately?

Not sure why you would need to involve an uncle? If would only make it more complex in tax terms...
It can go to his mother and the next day go to him if that’s what they agree...

House could be considered part of the farm...

As someone else has said, you need to talk to an expert but no harm to look up the necessary reliefs and have an understanding before you talk...

Best of luck...

LawBoy2018

patsy_mccabe wrote: »

Oh, I agree and I did say that in the first post. I can't get involve, but he has asked me for advice. He just seems confused and stressed over everything. I'd just like to have some ideas in his head when he talks to a solicitor.

The obvious relief which might be available for CAT is agricultural relief.

This kid is presumably a farmer full time?

Good loser

Some solicitors have the reputation for being good at such a thing.

Probably first port of call should be to an accountant.

Big focus feature on farm tax/inheritance in this week's IFJ (16/1/21) by IFAC pages 40 to 44.

Good loser

A key question would be whether the parent/child reliefs can be applied for a grandparent/grandchild transfer.
An enquiry to the Revenue should clear that up. Patsy could do that directly.

LawBoy2018

Good loser wrote: »

A key question would be whether the parent/child reliefs can be applied for a grandparent/grandchild transfer.
An enquiry to the Revenue should clear that up. Patsy could do that directly.

They obviously can't. If the agricultural relief isn't available, he'll be paying CAT.

whelan2

Is your local teagasc advisor any good. We are doing stuff here too on farm transfer and our teagasc man has been very good

JeffKenna

whelan2 wrote: »

Is your local teagasc advisor any good. We are doing stuff here too on farm transfer and our teagasc man has been very good

Teagasc have a specialised person for this. They had an inheritance briefing last December I think that is probably still on the site. Worth a listen and you'd get his name from that.

Pawwed Rig

wrangler wrote: »

I know someone that was allowed the favourite nephew allowance even though they were no relation but had worked with the owner for year

Did they get an opinion on it or has it just not been challenged by Revenue?
You can claim whatever you like but it might not always stand up if scrutinised.

patsy_mccabe

I was talking to a tax expert once and he said something very insightful about the revenue. He said that they don't want to break up viable businesses. Think about it, why would they? You will be paying them tax for the rest of your life. Most farmers are part-time and therefore highly productive individuals.
This is why if you don't qualify for agricultural relief, you will get business relief. I suspect there is a similar route here like 'favourite nephew' for grandchildren.

LawBoy2018

patsy_mccabe wrote: »

I was talking to a tax expert once and he said something very insightful about the revenue. He said that they don't want to break up viable businesses. Think about it, why would they? You will be paying them tax for the rest of your life. Most farmers are part-time and therefore highly productive individuals.
This is why if you don't qualify for agricultural relief, you will get business relief. I suspect there is a similar route here like 'favourite nephew' for grandchildren.

The criteria is provided for in the TCA 1997. If you don't meet it, good luck. Revenue don't care about whether or not one may be a highly productive individual. Any discretion afforded to them will be used to ensure that the legatee pays CAT.

wrangler

Pawwed Rig wrote: »

Did they get an opinion on it or has it just not been challenged by Revenue?
You can claim whatever you like but it might not always stand up if scrutinised.

It's 20 years a go now, so it's obviously right also a neighbour got the same concession taking land from his grandfather lately.

trg

patsy_mccabe wrote: »

I was talking to a tax expert once and he said something very insightful about the revenue. He said that they don't want to break up viable businesses. Think about it, why would they? You will be paying them tax for the rest of your life. Most farmers are part-time and therefore highly productive individuals.
This is why if you don't qualify for agricultural relief, you will get business relief. I suspect there is a similar route here like 'favourite nephew' for grandchildren.

Revenue are guided by their own legislation. There is no doubt they don't want to break up viable businesses but they won't go outside the scope of the legislation.

Favourite nephew relief is only available to nephews or nieces of people running a business, including a farm.

You said "if you don't qualify for agricultural relief, you will get business relief" - you said WILL.....this is not accurate.

I've experience from a former life in this and I'm just pointing out 3 parts of one post that are not accurate and I'm not trying to be a dose or condescending.

If the lad is stressed out then dealing in facts is the only way, false assumptions will only make things worse.

Appointment with IFAC or FDC for the tax side of things first and then perhaps ask them for a recommendation of a very good practical (important) solicitor.

Base price

Patsy, try talking to the IFA first and maybe they can give you a better idea. As far as I know you don't have to be a member.
https://www.ifa.ie/farm-succession/

Grueller

Tell him not to stress, being gifted a farm should not be a reason to stress you out. Sit back and look at the opportunity that is being given.
As has been said, a good solicitor and accountant before doing anything. I always thought that an accountant, as dear as mine is, pays back his fee every year in multiples. I would be on the phone at 9.00am on Monday morning.

LawBoy2018

The only thing he needs to at the minute is spend time with his dying grandfather. If he owes a significant tax bill and he doesn't have the means to pay it, Revenue will likely be open to negotiations as to how/when he offsets his tax liabilities.

What does the grandfather want to do? Has he got other children and grandchildren?

patsy_mccabe

Look, I'll say it again, I'm not advising him as to what to do, I'm merely suggesting options which may be open to him, before he talks to a solicitor. Thats all.