Farm Transfer From Parents to Son Queries

N

newby1234

Guest
Hello,

I am seeking some advice on the costs and options associated with the transfer of a farm from my parents to me. I am only using this forum to build my knowledge in this area and I will be seeking professional help on the issue also.

I am under 35, and not farming the land. I have a 3rd level degree but no farming qualifications.

My Parents are both over 55.

I think I would qualify as a farmer in regard to agricultural relief.

I would estimate that the value of the farm is about 1,000,000, based on less than 100 acres with no zoned land.

I think this will put me below the CAT threshold, but changes from 90% to a lower value in the future may change this.

The land has been rented out for the last 7 years and the early retirement scheme was in place for the 10 years previous to this. Does the affect the CGT position of my parents with regard to retirement relief if a transfer takes place.

The land would have been farmed by my parents for over 10 years previous to retiring.

I would not be planning on farming the land (or selling it) after the transfer. I would consider farming it if it reduced tax costs. I realise that I cannot sell that land for 6 years and have to be resident in Ireland for 3 years after the transfer.

I also have a site on the land that I have not transferred into my name yet. Would this have any effect on the situation. Should I transfer the site regardless before I start building my house.

Thanks for your time and advice.
 
Hi

I think you have covered alot already. But there are 3 taxes involved:

Capital Gains Tax:
The gift of the farm by your parents is subject to CGT.
Retirement Relief would normally apply to a gift to a child but one of the criteria is that the land has been farmed for 10 years prior to the date of the gift. There is a relief where the land is gifted to a child within 15 years of being let where the land had been farmed for 10 years prior to that date. You have indicated that the land has been let for 17 years and so may not qualify for Retirement relief.

Capital Acquisitions Tax:
The gift is subject to CAT. There is relief for Agricultural Assets where the assets of the donee are made up of more than 80% by agricultural assets. There is a 90% reduction in the value of the gift.

Stamp Duty:
The gift is subject to stamp duty. There is relief for a young trained farmer. Where you have the relevant qualification and sign a certificate stating 50% of you time will be spent farming you get a full exemption.

In relation to the site.
CGT
There is relief from CGT for the transfer of a site to a child to construct their principle private residence.
Stamp Duty
The transfer is subject to stamp duty with a 50% relief for transfers between blood relatives.
CAT
It is subject to CAT. The value will be dictated by whether the site has planning or not.

C.
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Its likeyl you will fail the stamp duty test - that you spending the substantially jority of your time working the land - note the requirement is not as straight forward as 50% of your time.

CGT retirement releif is definately off the cards for your parents as your outside the 15 year limit - in your circumstances perhaps it would be best to look at inheriting the land on your parents passing - this would avoid stamp duty and capital gains tax issues but you run the isk of a changed tax landscape in the future
 
Thanks for your advice.

I am currently getting some advice from the accountant/solicitor. Still not sure whether it the correct move to do a transfer now or to wait.

I am currently just on the high rate tax bracket with my PAYE income. If I get the land transferred, I assume the rental income from the land will have to pass over to me (>10K). Would this then be seen purely as extra income to me which I would be liable for 41% tax on or do I have other options.

What agreements can I come to with my parents that would lessen the tax on this income as they currently pay no tax on it and have the use of its full value.

Any thoughts or ideas on this issue would be appreciated.
 
Transfer land from son to parents?

Hi I am new to this forum.. just reading the questions there about transferring land from parent to son, but I have a different problem.. well my husband! His parents bought a farm in my husbands name, as for the other sons, and this was supposed to be his inheritance. But now the father wants the land back but does not want to be seen to take from his son, so wants my husband to transfer to his brother's name. My husband does not agree and wants to transfer to his father's name. Apparently he cannot do that? we are finding very difficult to find out the correct information. Can any one help to clarify what can be done in this situation please? very grateful. K
 
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