Selling land

TooOldBoots

I bought a small out farm 10 acres of good land about 4 years ago, I got it for small money, 35k + stamp duty and solicitors fees so all on about 40k.
I had a lad up to me at the weekend asking would I consider selling it on, he has made me an offer I have to think about, it's over 160k.
If I sell what are the Tax implications of this for me?
this is a kinda windfall in reality, but there's no point selling it if the Taxman takes half the profit

duffysfarm

33% on any gain. not much planning that you can do for cgt.

do you have any shares or other assets that are carrying a loss? for example if you had €20k worth of shares that original cost €40k then you could sell these and offset the loss against the gain on land sale and then if you really wanted the boi shares you could buy these back

were you farming or renting the land out?

if it were me i would sell i think regardless of the tax. i think property is overvalued at the moment (even though it will probably rise for another couple of years)

TooOldBoots wrote: »

I bought a small out farm 10 acres of good land about 4 years ago, I got it for small money, 35k + stamp duty and solicitors fees so all on about 40k.
I had a lad up to me at the weekend asking would I consider selling it on, he has made me an offer I have to think about, it's over 160k.
If I sell what are the Tax implications of this for me?
this is a kinda windfall in reality, but there's no point selling it if the Taxman takes half the profit

muddle84

From my understanding of how these things work, you would be paying capital gains tax on the profit at 33% so approximately 39k in tax. In reality it would be a little bit less as you would be writing solicitors fees and i am not sure if there is an yearly allowance that would be deducted from the profit too. Probably best to talk to an accountant.

But if someone is coming to you directly, it can either be that it is worth that much to them or it could be that is the going rate for land in that area now. You might be able to make more money if you go to an estate agent and get other potential buyers involved?

Mooooo

As lads said it'll be 33% on the difference between buying and selling. If you were looking at another bit of ground you could sell and buy without the tax liability assuming the sale price is less than the ground you're buying. If prob worded that arseways but there is allowance for consolidation I think. A chat with the accountant may be worth it

TooOldBoots

At 160k it's well over valued but if I was to go out in the morning and replace the 10 acres you could end up paying as much. It does suit me to sell as it's a bit far away and just not big enough for the hassle.
Is there anyway I could buy another parcel of land even for the same amount and avoid the Tax?
If not I'd be tempted to use the money to buy another house on town and just rent it out.

muddle84

TooOldBoots wrote: »

At 160k it's well over valued but if I was to go out in the morning and replace the 10 acres you could end up paying as much. It does suit me to sell as it's a bit far away and just not big enough for the hassle.
Is there anyway I could buy another parcel of land even for the same amount and avoid the Tax?
If not I'd be tempted to use the money to buy another house on town and just rent it out.

To the best of my knowledge its only your primary residence thats exempt from capital gains tax if you sell it. Once you sell an asset you're going to have to pay the CGT.

Mooooo

Land can be sold to aid in purchasing another block without cgt liability, not sure of timeframes. Talk to the accountant I'd say

K.G.

Also have you lost money on any investments lately they can be set against the cgt on the land

Cran

There was a CGT exception for land bought between Dec 11 and Dec 18 then held for more than 4 years and sold before 7 years. Not sure if still in place but if you fall into it serious benefit

Kevhog1988

Be very hard not to turn that money doen. Even if you pay the CGT you have still made a big profit on it

TooOldBoots

I'll be chatting with a Tax advisor first.
The mad thing about it was there was several small parcels about the place for sale a few years back that nobody would make an offer on. Now everyone is looking,
I don't see much difference in cattle prices, if anything the amount to be made from farming has fallen due to reduced sfp.

blue5000

TooOldBoots wrote: »

I'll be chatting with a Tax advisor first.
The mad thing about it was there was several small parcels about the place for sale a few years back that nobody would make an offer on. Now everyone is looking,
I don't see much difference in cattle prices, if anything the amount to be made from farming has fallen due to reduced sfp.

Now would be a good time of year to sell as CGT wouldn't be due until November. So you have until then to re-invest it in another piece of land if some comes up near you before November.

wrangler

TooOldBoots wrote: »

At 160k it's well over valued but if I was to go out in the morning and replace the 10 acres you could end up paying as much. It does suit me to sell as it's a bit far away and just not big enough for the hassle.
Is there anyway I could buy another parcel of land even for the same amount and avoid the Tax?
If not I'd be tempted to use the money to buy another house on town and just rent it out.

The only ''roll over relief'' allowed now is restructuring relief. you'll find the Terms and Conditions for that here

https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/farm-restructuring-relief.aspx

trg

There's also potential for a 10% cgt rate on the gain.

Bass Reeves

TooOldBoots wrote: »

I'll be chatting with a Tax advisor first.
The mad thing about it was there was several small parcels about the place for sale a few years back that nobody would make an offer on. Now everyone is looking,
I don't see much difference in cattle prices, if anything the amount to be made from farming has fallen due to reduced sfp.

10-15 acres are nice size plots for a house. Take away a site value of 70-100k and you have land at 5-8k/ acre. The sweet spot price wise is in the 120-200 k. Often a couple may have an apartment or other investment. That covers the price of the land block/site. After that you get a mortgage to build the house or they may have a primary residence that will release capital as well. Many people forget a rural site costs 70-100k

SuperTortoise

You'd be talking 120k profit when all is said and done, i'd find it hard to turn down myself given the circumstances you outlined.
If you were to go down that route you should have a clear plan what you want to do with the money, having it sit in an account is a costly business with banks charging to hold deposits, clearing any outstanding debt such as a mortgage or maybe buy a few acres closer to your home farm?

Dunedin

Bass Reeves wrote: »

10-15 acres are nice size plots for a house. Take away a site value of 70-100k and you have land at 5-8k/ acre.


Many people forget a rural site costs 70-100k

OP didn’t mention anything about a site and I doubt very much there is a site on given the original buying price.


Rural sites not making that money any more. They were and a lot more in the Celtic tiger days but you’d buy a good site for €50-60k these days

SuperTortoise

Dunedin wrote: »

OP didn’t mention anything about a site and I doubt very much there is a site on given the original buying price.


Rural sites not making that money any more. They were and a lot more in the Celtic tiger days but you’d buy a good site for €50-60k these days

Would agree with that, planning laws make it extremely difficult to get planning in the first place, the appetite for sites is gone around here anyway.

minerleague

SuperTortoise wrote: »

Would agree with that, planning laws make it extremely difficult to get planning in the first place, the appetite for sites is gone around here anyway.

The costs before you ever lay a block are gone mad also

Bass Reeves

SuperTortoise wrote: »

Would agree with that, planning laws make it extremely difficult to get planning in the first place, the appetite for sites is gone around here anyway.

Yes but 10-20 acres make it a bit easier to get planning especially in some counties. Not to far from me a lad bought 16 acres for 160k about 3 years ago. He has the house nearly build on it now. Know another.place that is going through that process as well. Slightly smaller piece of land. Cost much the same.

Bass Reeves

minerleague wrote: »

The costs before you ever lay a block are gone mad also

When you consider a 3 bed newly build semi D is not costing 250k+ in most places you have to.put things in perceptive. Yes it expensive by the time design/planning, development levy, health and safety, water and electricity is included it costing about 15-20 k before a block is laid.

Bass Reeves

Dunedin wrote: »

OP didn’t mention anything about a site and I doubt very much there is a site on given the original buying price.


Rural sites not making that money any more. They were and a lot more in the Celtic tiger days but you’d buy a good site for €50-60k these days

You buy very few sites nowadays for 50k. I would not sell a site for less than 70-80k and I gave over a kilometer of road frontage. Any place within 15-20 miles of a major city you pay at least that or 10 miles of a large town

Mooooo

The problem is planning isn't being given anymore. Unless whoever wants the site is living in the area already it's unlikely they would get planning at all

roosterman71

I never understand this fascination with making decisions based on having to pay tax. In this case, the OP is going to approx triple his investment. Bought for 40, sell for 160 - tax leaves in the region of 120k in your hand to do with what you like. And you've said the land isn't near you. It's a no brainer in my eyes. If you make profits, you pay tax. No one would run a business and limit profits just because there would be a tax bill. Reduce the bill alright as best you can so more money stays with you. But if that's not possible, you still have around 120k!

wrangler

Mooooo wrote: »

The problem is planning isn't being given anymore. Unless whoever wants the site is living in the area already it's unlikely they would get planning at all

Most people looking for sites in the country won't tolerate living beside a busy farm, unfortunately too much planning has been given in the countryside already

Water John

Mooooo wrote: »

The problem is planning isn't being given anymore. Unless whoever wants the site is living in the area already it's unlikely they would get planning at all

This has been found against free movement by the EU, in Belgium.

DBK1

Dunedin wrote: »

OP didn’t mention anything about a site and I doubt very much there is a site on given the original buying price.


Rural sites not making that money any more. They were and a lot more in the Celtic tiger days but you’d buy a good site for €50-60k these days

Lads looking to sell sites around here (midlands) are getting it hard to get much above €35k for them.

There’s one up for sale for almost 2 years now and the owner is looking for €40k and getting no offers. And it’s right beside the 3 sites he already sold for over €80k each in the good times.

Dunedin

Bass Reeves wrote: »

You buy very few sites nowadays for 50k. I would not sell a site for less than 70-80k and I gave over a kilometer of road frontage. Any place within 15-20 miles of a major city you pay at least that or 10 miles of a large town

Tbh I was being generous when I said €50-60k but in reality it’s €40-50k around here nowadays. That’s in the midlands close to a major town - sites were freely making over €100k in the tiger days but not making 50€ now.

Base price

AFAIK you can offset capital costs - fencing, water supply, gates, building a shed, crush etc against CGT although on 10 acres they would probably be minimal.

Bass Reeves

Dunedin wrote: »

Tbh I was being generous when I said €50-60k but in reality it’s €40-50k around here nowadays. That’s in the midlands close to a major town - sites were freely making over €100k in the tiger days but not making 50€ now.

Neither should just taking a profit for the sake of it be a justification. Now in this case the profit is substantial and is a distance away and the property may not appreciate much further. Taxation should always be taken into account. In this case. The taxation element is about 25% of the total sum.

However if the property would continue to appreciate and you didn't require the cash at present holding would be the right answer. Or for instance if you had a family then this might be a site for one of your children. As well of you above 55(I thnink that is the age) there is an 200k allowance that you can use to offset any gain on a once off. Therefore if you were within 5 years of that I hold off as well

TooOldBoots

Just an update,
I am caught for the CGT, nothing can be done about it until I find some land closer to me at which stage I can get Farm Restructuring Relief. Unfortunately there's not much land for sale near me, I may just end up buying a house in town instead.
We shook hands on 165, the buyers are delighted as there is a fine site of a house plus it's down the road from his uncles place. Makes sense to me now as the uncle stopped saluting me a good few weeks ago so he must have known they would make a bid for it. He won't be too happy to learn I'll have the use of it for the sfp this year as-well.

minerleague

TooOldBoots wrote: »

Just an update,
I am caught for the CGT, nothing can be done about it until I find some land closer to me at which stage I can get Farm Restructuring Relief. Unfortunately there's not much land for sale near me, I may just end up buying a house in town instead.
We shook hands on 165, the buyers are delighted as there is a fine site of a house plus it's down the road from his uncles place. Makes sense to me now as the uncle stopped saluting me a good few weeks ago so he must have known they would make a bid for it. He won't be too happy to learn I'll have the use of it for the sfp this year as-well.

Well done, tidy profit there, don't mind buying a house , a Ferrari or a fendt and a pair of raybans and drive up and down the road like a young fella!

Bass Reeves

minerleague wrote: »

Well done, tidy profit there, don't mind buying a house , a Ferrari or a fendt and a pair of raybans and drive up and down the road like a young fella!

Buy the house and use the rent to buy the Ferrari and raybans....you get to write off 66% of the Ferrari against tax and the interest on the loan

TooOldBoots

Nice tidy profit, I feel like Michael Douglas out of Wallstreet.:D
The mad part of it all was it was TB which forced my hand to buy the place as I was locked up and overstocked. I had even thought about planting the place the year after!
idk about the Ferrari, I might buy some glass for the back window of the tractor:D

Mooooo

TooOldBoots wrote: »

Nice tidy profit, I feel like Michael Douglas out of Wallstreet.:D
The mad part of it all was it was TB which forced my hand to buy the place as I was locked up and overstocked. I had even thought about planting the place the year after!
idk about the Ferrari, I might buy some glass for the back window of the tractor:D

Fairplay, half shows good reason to not plant a bit of ground. Lamborghini tractor be a half way house, started from the same stable as the sports car...

Kevhog1988

TooOldBoots wrote: »

Nice tidy profit, I feel like Michael Douglas out of Wallstreet.:D
The mad part of it all was it was TB which forced my hand to buy the place as I was locked up and overstocked. I had even thought about planting the place the year after!
idk about the Ferrari, I might buy some glass for the back window of the tractor:D

Congrats, nice to see people getting a bit of a rub of the green after having a hard time with tb or similar.

Bass Reeves

TooOldBoots wrote: »

Just an update,
I am caught for the CGT, nothing can be done about it until I find some land closer to me at which stage I can get Farm Restructuring Relief. Unfortunately there's not much land for sale near me, I may just end up buying a house in town instead.
We shook hands on 165, the buyers are delighted as there is a fine site of a house plus it's down the road from his uncles place. Makes sense to me now as the uncle stopped saluting me a good few weeks ago so he must have known they would make a bid for it. He won't be too happy to learn I'll have the use of it for the sfp this year as-well.

Take away the site value and the land is at near agri value. As well and f he is going to inherit the uncles place he is now near enough to give a hand but not living on his land so less beholden to him. If things go South he is still independent of the uncle

TooOldBoots

Bass Reeves wrote: »

Take away the site value and the land is at near agri value. As well and f he is going to inherit the uncles place he is now near enough to give a hand but not living on his land so less beholden to him. If things go South he is still independent of the uncle

Yes it's win win for the nephew, unless the factory he's working in is paying a surgeons wage it's more likely the uncle is bank rolling this.
Either way I'm happy as I am getting burnt from the farm being so fragmented, I'll still have 7 different land parcels in 2 different parishes. If I had a choice I'd rather farm half the area in one place than what I'm doing at the moment.

JeffKenna

TooOldBoots wrote: »

Just an update,
I am caught for the CGT, nothing can be done about it until I find some land closer to me at which stage I can get Farm Restructuring Relief. Unfortunately there's not much land for sale near me, I may just end up buying a house in town instead.
We shook hands on 165, the buyers are delighted as there is a fine site of a house plus it's down the road from his uncles place. Makes sense to me now as the uncle stopped saluting me a good few weeks ago so he must have known they would make a bid for it. He won't be too happy to learn I'll have the use of it for the sfp this year as-well.

Silly question, but why did the uncle stop saluting you?

Bass Reeves

TooOldBoots wrote: »

Yes it's win win for the nephew, unless the factory he's working in is paying a surgeons wage it's more likely the uncle is bank rolling this.
Either way I'm happy as I am getting burnt from the farm being so fragmented, I'll still have 7 different land parcels in 2 different parishes. If I had a choice I'd rather farm half the area in one place than what I'm doing at the moment.

Where is the factory is he on shift work. A lot of factories are paying 40k in wages now. If he had over a third of it and borrowed 100k @3% his repayments would be 6.5k/year over 20 years

TooOldBoots

JeffKenna wrote: »

Silly question, but why did the uncle stop saluting you?

folks are odd,
you'd be odd too knowing that you had the money 10 times over in your back pocket and didn't buy it the first day.

Donegalforever

TooOldBoots wrote: »

At 160k it's well over valued but if I was to go out in the morning and replace the 10 acres you could end up paying as much. It does suit me to sell as it's a bit far away and just not big enough for the hassle.
Is there anyway I could buy another parcel of land even for the same amount and avoid the Tax?
If not I'd be tempted to use the money to buy another house on town and just rent it out.

I think you are on the right track about selling the 10 acres and buying another parcel of land more convenient to you.
Your best bet would be to consult a good accountant or solicitor for advice.

Dinzee Conlee

Meant to post earlier - I hope your windfall brings you luck TwoolsBoots...

Dunedin

Dinzee Conlee wrote: »

Meant to post earlier - I hope your windfall brings you luck TwoolsBoots...

+1

TooOldBoots

Dinzee Conlee wrote: »

Meant to post earlier - I hope your windfall brings you luck TwoolsBoots...

Thanks lads,
At my stage in life I'll try and help out my two daughters, they didn't get anything from the Farm as that'll go to my son.
If I had them funds 30 years ago I'd have so many plans for it, now I'm near retirement and I have no use for it really. So unless the Son has plans I'll probably buy a house and put the daughters names on it.
I still need to find out the full tax bill, the accountant said it might not be as bad as I thought.

wrangler

TooOldBoots wrote: »

Thanks lads,
At my stage in life I'll try and help out my two daughters, they didn't get anything from the Farm as that'll go to my son.
If I had them funds 30 years ago I'd have so many plans for it, now I'm near retirement and I have no use for it really. So unless the Son has plans I'll probably buy a house and put the daughters names on it.
I still need to find out the full tax bill, the accountant said it might not be as bad as I thought.

Similar to myself, but you're lucky to have children to transfer it to tax free, it would've been lovely to have it 30 years ago

amacca

Bass Reeves wrote: »

Buy the house and use the rent to buy the Ferrari and raybans....you get to write off 66% of the Ferrari against tax and the interest on the loan

Explain! Are you putting the Ferrari in as agricultural machinery and the glasses in as PPE 😅

Bass Reeves

amacca wrote: »

Explain! Are you putting the Ferrari in as agricultural machinery and the glasses in as PPE 😅

No you are allowed to write off 2/3 of a car as a business expense, it could be a Ferrari or a Avensis. However there is a cap on the value at about 25k if I remember right, you just need to buy one for less than that.