Agricultural Relief from Capital Acquisition Tax

[Keith e]

Hi All,
Just quick run down, my mother inherited 34 acres from my grandmother (while she was alive) in Feb 2015 and took the agricultural relief from capital tax,

We are now in a position where we are ready to build a house,
My mother is afraid she will have to pay the full tax bill (lose the relief) on the 34 acres if she signs us over a site (which will be 1 acre).

Could anyone advise how this works,
In short mother is currently in receipt of the agricultural relief from capital tax, she wants to sign over a 1 acre site to us to build a house what tax would she have to pay.
Per acre value of €7450 used for the agricultural relief.

Any help would be greatly appreciated.

 

[Ravima]

are you saying that WITH the relief you valued at €7450 or WITHOUT the relief?

 

[Keith e]

It was valued at €7450 per acre x 34 acres (market value €253,300) this is then reduced by 90% so the inheritance value is reduced. But to get this you must agree to farm the land for 6 years, if you change this the relief is withdrawn.
So what we need to know can she change to use on the he 1 acre (gift it to us) and what are the tax implications of doing so

 

[Gordon Gekko]

Did she inherit other stuff as well (i.e. was her Group A threshold used up)?

 

[Keith e]

Yes a house as well, she had to pay something (no sure how much) but she was over the group a threshold

 

[Ravima]

Talk to a specialist agri tax advisor. Make sure you get recommendations from people satisfied with the service though, as opposed to simply flicking through golden pages.

AFAIK, there was a change in law in JAN 2015, where the person getting the land and relied has to dedicate a certain amount of time farming per week. This was a huge change from previous law. I also understand, but am open to correction, hence the advice in first sentence, that the person who got the land, can GIFT, free of charge a section to another, without the person losing the relief. If that is so, then under no circumstances can you pay mother for the site.

Get professional advice, its the cheapest in the long run.

 

[RedOnion]

I can only second what Ravima said, get proper advice from someone dealing with this regularly. Get recommendations locally.
Apart from the ability to gift, there were other changes around the tax treatment of any sale proceeds that weren't reinvested in agricultural land (they made provisions to cover for example CPOs, or where a farmer wanted to sell to buy land closer to his own farm), but the rules are all a bit complex.
It's possible to do what you want, but approached the wrong way could trigger a tax bill. I assume if your mother isn't farming the land, it's leased to a full time farmer on a long term basis to be compliant with the provisions that Ravima mentioned above? Even removing the site from a lease might be tricky.