Buying land, options...

Bit of head scratcher. I have an opportunity to buy some land. I will have to sell some land/sites to fund it. But, I took over the farm as a going concern to run for minimum 6 years to avoid some taxes. So, effectively there will be a gap between the opportunity to buy, and my ability to sell.

What are my options for funding? I will be approaching the banks but no idea what they'll say tbh.

Grueller

How long will the gap be?

Tbh I'd say they will look a good portion of your own place as security for a start. I don't even know if they will do a bridging finance like you are talking about. They may only lend if you you can show the capacity to borrow the money without selling, otherwise they are too exposed to a property price crash.

maestroamado

https://www.boards.ie/discussion/2058229229/buying-land-options

reliable accountant... ask around as farming not great for borrowing...

Mecanudo

https://www.boards.ie/discussion/2058229229/buying-land-options

Credit union agri loan might be an option?

https://www.boards.ie/discussion/comment/118514297#Comment_118514297

Just under 3 years. I do have another parcel not subject to the tax burden but I'd be very reluctant to sell that tbh. The risk is understandable from their POV, a lot can happen.

straight

https://www.boards.ie/discussion/2058229229/buying-land-options

I'd imagine it all comes down to repayment capacity as they see it.

https://www.boards.ie/discussion/comment/118514310#Comment_118514310

Yeah, that's one of my next steps. Been re borrowing before, wasn't the best result.

https://www.boards.ie/discussion/comment/118514333#Comment_118514333

They're on the list as well.

https://www.boards.ie/discussion/comment/118514488#Comment_118514488

"Oh well" in that case 😄 The vexing thing is there is more than enough land to sell if it weren't for the transfer tax burden.

straight

https://www.boards.ie/discussion/comment/118514496#Comment_118514496

Ask your accountant about consolidation of holdings relief.

https://www.boards.ie/discussion/comment/118514532#Comment_118514532

Cheers, will do, is that like a tax exemption if one plans to put fund s back into land?

straight

https://www.boards.ie/discussion/comment/118514553#Comment_118514553

Ya, was reintroduced a bit ago. Best of luck.

trg

If its gift tax your talking about then maybe buying the new land would still qualify you so you won't get the tax hit at least.

The bigger thing could be the bridge between buying and selling.

http://www.ballinasloeenterprisecentre.ie/profile.php?ID=30 - this guy is good for dealing with awkward loan applications.

https://www.boards.ie/discussion/comment/118515353#Comment_118515353

I can't quite recall, must talk to my tax advisor. Dad was still alive when he transferred, once I gave an undertaking to farm the place for 6 years I avoided two taxes.

Agree about bridging the gap, I suppose all I can do is go and ask. Thanks for the recommendation.

The land in question is more of a would be nice to have than must have, so I won't break myself to get it either.

wrangler

https://www.boards.ie/discussion/comment/118515366#Comment_118515366

You won't have to pay the CAT if you sell the land to buy land.

trg

Could have to pay the cgt that his dad avoided though. Reinvesting in land won't help that

Actually if the land your selling has gone up in value since op got it there'd be cgt on that as well

K.G.

Don't put the sale of sites into the plan unless you have a sale agreement already.The plan will have to stand on its own 2 feet without site sales.if you subsequently sell sites it's a bonus

wrangler

https://www.boards.ie/discussion/comment/118515694#Comment_118515694

You can claim relief from CGT if you dispose of farmland for farm restructuring purposes, so he'd dodge that bullet

Pinsnbushings

My understanding is there wouldn't be a tax burden as long as you you are replacing with land, restructuring relief. We spoke to our accountants about similar last year. We are close to transferring over the land to myself, and we may sell an out farm at some stage so we're wondering should it be done while my father has retirement relief, bit even if I only had it a few months I could sell to buy other land. Also the valuation at transfer is important, as you only pay tax on the capital gain.

Best talk to a good accountant.

Pinsnbushings

This I saw on donedeal, I'd be very weary but sure maybe it may be legit.

https://www.donedeal.ie/dairycattle-for-sale/finance-restructuring-alternative-financing/30200636

trg

trg

Wrangler that's true yeah however I've seen cases where Teagasc refuse to give the cert of consolidation where the entire parcel of outfarm isn't being sold.

Their logic was that its not a consolidation if you're only selling say 10 acres off a 40 acre plot. The remaining 30 acres is still fragmented.

wrangler

https://www.boards.ie/discussion/comment/118516291#Comment_118516291

Yea, it has to be a proper consolidation, in that it has to shorten the distance travelled

https://www.boards.ie/discussion/comment/118516380#Comment_118516380

It'll sure do that in my case. From miles to meters.

Tonynewholland

https://www.boards.ie/discussion/comment/118516380#Comment_118516380

Does selling a site and not farm land qualify for consolidation relief.

https://www.boards.ie/discussion/comment/118518089#Comment_118518089

That's a good point, I'd say I could keep the site and sell farmland if I could get out of the tax trap.

trg

https://www.boards.ie/discussion/comment/118518089#Comment_118518089

You wouldn't be consolidating the holding if only selling a site off the far away one

Tonynewholland

https://www.boards.ie/discussion/comment/118518098#Comment_118518098

Is your tax trap the 20 year rule to own and farm the land yourself

Tonynewholland

10 year I mean

Tonynewholland

https://www.boards.ie/discussion/comment/118518109#Comment_118518109

If selling to buy closer to home why not

https://www.boards.ie/discussion/comment/118518179#Comment_118518179

Just 6 years afaik, of which 3+ have passed

trg

https://www.boards.ie/discussion/comment/118518191#Comment_118518191

If you've 30 acres on an outfarm and you sell 2 x half-acre sites to buy 7 or 8 acres beside you then you haven't consolidated your holding......you still have 29 acres on an outfarm

jimmy G M

IMO, a Bank will not grant open ended bridging for 3 years on the pretext of selling a site / land in 3 years time. Your best option is to be able to show repayment capacity on the loan for the new land over say a 20 year term .

To boost your income how about leasing some of your existing land for 5 yrs tax free. Then when the lease is up, you can sell and avoid the consanguinity relief clawback. Not ideal but might be an option?

That guy mentioned earlier in Ballinasloe is def worth talking to. What you need is a good financial consultant, experienced in getting awkward loan applications over the line with lenders. That chap is ex AccBank & Rabobank. Good luck with it.

Mooooo

There is relief on farm restructuring where one parcel is sold to purchase another. The time difference between the two is what may catch you on the tax front, as said accountant is best to talk to. On the finance side put the plan together and go to the banks, you'll find out fast enough. Accountant should help on that front too

Tonynewholland

https://www.boards.ie/discussion/comment/118518253#Comment_118518253

I'm not sure about selling a site but you can sell part of an outfarm to buy land closer to home. I've seen it done many times

trg

https://www.boards.ie/discussion/comment/118518372#Comment_118518372

Your query was about a site and a site doesn't qualify because the holding isn't consolidated.

You're not guaranteed to get a consolidation cert when you're not consolidating your holding, obviously enough.

I'm sure there are sound Teagasc lads that'll sign a cert but it's not guaranteed and shouldn't be taken for granted