Agri Relief and Leasing

Hi, tell your friend to get in contact with a solicitor, 2 sets will be needed during the transaction, his and his parents. A valuation will be needed from an auctioneer on the list and the solicitor will advise on the relief and conditions

Good luck to them

If the farmhouse is in the yard and is integral to it, it qualifies. A lifetime right of residence doesn't affect this I was informed by my solicitor when we went through the process a few years ago.

You're right about the 75% rule. Issue is that if they're together the qualifying conditions aren't met for the land either. Its not that they'd just lose it on the house.

I'd suggest a meeting with a specialist farm tax accountant like ifac or fdc. They'll charge but be money well spent.

Very intricate stuff there hence I'd go tax specialist before solicitor

I went through this process and only found this clause myself when going through the various revenue docs dispute having solicitors and accountant advice.

Luckily in my case the house was less than 25 percent of the overall value and so we were able to satisfy the requirement to lease at least 75 percent of the transferred asset.

It wasn't needed in my case but I believe the right to reside can be used to calculate a reduced value for the dwelling in terms of what it is worth to receiving person at time of inheritance. This may help.

Alternatively, surely he can inherit the land now and claim farm relief and later inherit the house at full value and possibly be covered under parents exemption limit.

I don't know if there is time limits that must be observed between such transactions but all worth looking into.

It's possible of course that the 80 percent rule cannot be satisfied without the house included.

I'd imagine he is best to farm it himself for the 6 year term. He would have to satisfy 50 percent or more of working week farming if he doesn't have a green cert I believe or else get a green cert.

You cannot avail of tax free allowance if you're related to the tenant

Get a price upfront.

Agricultural Relief would still be allowed.

Can’t do tax free lease from parent to child or from sibling to sibling.

AFAIK if the house has a right of residence, when it is transferred there is no liability attached to it until you actually have got full possession.

Yes but a house in a farm yard has limited value. The liability will be down the road when you are better set up. In reality you are where you are so you have to live with that. If you end up with a tax bill of 50-60k or even more after inheriting maybe 3/4 of a million in assets and you cannot work it out its too bad.

If he wanted to farm it himself without a green cert he couldn't avail of agriculture relief

It shows how important it is to have the green cert as it open up.your options. However the farm is supposed to be small. His personnel inheritance allowance is 335k. You be able to value a small amount o midsized farm at or near this. The real advantage of agri relief is over valuing so if you sell it down the line you are reducing your CGT liability. Unless he is going to/ or has inherited substantial extra non agri property/ cash he will not have a substantial tax bill.

The way I see all these reliefs is that they are only any use to the larger agri operator. You could inherit 200 acres of land, farm house, sheds and machinery value them at 2.5- 3 million and have 600k in personnel assets and have no tax liability, if they lease it out for 4-5 years

But the lad that has a house that he bought and paid for himself, and a bit of savings put away to put children through college driving a decent car who inherits a small or mid sized that he intends to farm himself ends up with a capital tax liability.

That is why I am an agnostic on these low interest bank loans, agri relief and leading relief. They are of limited value to the average guy.