Apologies in advance for a long winded “brief” on my situation… I have a question in relation to agricultural and business relief through inheritance.
My mother (a pensioning widow, age 75) inherited farmland from my father (a farmer who passed away approx 10 years ago). I now farm part of this land on a part time basis (on a lease basis and I am a registered farmer with the Department of Ag). I am also in fulltime PAYE employment. My mother is deemed to be a retired farmer (i.e. availed of the early farm retirement pension and all land now leased out).
My mother has also operated a farmhouse B&B for circa 30 years (and still does). A courtyard of old agricultural stone buildings surrounds the B&B. I recently converted part of one section of the stone buildings into two self-catering accommodation units. My mother receives all the income from these buildings and retains ownership also (i.e. all I did was do the work and pay for conversion).
One thing I am concerned about is the future likely inheritance/CAT tax impact. Down the line, I would be due to inherit land, the farmhouse B&B and also the surrounding stone buildings.
In order to qualify for CAT tax farm relief, 80% of my assets need to be deemed to be of an agricultural nature (after taking inheritance into account). Our family accountant (farm tax specialist) thinks that everything I am due to inherit would be classified as agricultural (including partially converted buildings). Now the accountant does a good job enough but he appeared to be a bit rusty on the finer points of the CAT tax situation. I have consulted other accountants (recommended by tax institute) about they could not give me a definitive answer as regards if everything would qualify as farm assets.
I tried to confirm this with the Revenue CAT tax section but they only told me that the B&B and self catering accommodation would qualify for business relief. They did not explicitly state that the entire would not qualify for farm relief (due more to the man in hatch not knowing too much about the specifics of the relief’s).
I am afraid that the self catering etc may be classified as business assets (as opposed to farming assets e.g. agri tourism) and thus I would not qualify for farm relief on the land as I would not meet the 80% rule (especially as I would like to convert more of these buildings).
It is also likely that as time progresses I would not be able to fulfil the 80% agricultural asset threshold for farm relief so therefore I may have to try and rely on business relief either way (if possible).
The Revenue business relief guide states that in certain circumstances farm land may be classified as a business asset, thus it may possibly tie in with the B&B and self-catering for business relief purposes (???). The only drawback of this I imagine is that a portion of the B&B used for residential purposes would not qualify for business relief whereas the full house would qualify as a farmhouse under agricultural relief (should not be too big an issue).
Although I am deemed to be a “young trained farmer” the family solicitor has advised against transferring any assets during my mothers lifetime, which is fair enough.
Can anyone tell me in what circumstances farm land qualifies for business relief and if land, farmhouse and self catering can be combined for business relief purposes? Is there any obvious drawback of me trying to qualify under business relief solely?
As mentioned if I continue to convert further buildings the money I am pumping into the conversion project could end up costing me more in the long term.
Tom
My mother (a pensioning widow, age 75) inherited farmland from my father (a farmer who passed away approx 10 years ago). I now farm part of this land on a part time basis (on a lease basis and I am a registered farmer with the Department of Ag). I am also in fulltime PAYE employment. My mother is deemed to be a retired farmer (i.e. availed of the early farm retirement pension and all land now leased out).
My mother has also operated a farmhouse B&B for circa 30 years (and still does). A courtyard of old agricultural stone buildings surrounds the B&B. I recently converted part of one section of the stone buildings into two self-catering accommodation units. My mother receives all the income from these buildings and retains ownership also (i.e. all I did was do the work and pay for conversion).
One thing I am concerned about is the future likely inheritance/CAT tax impact. Down the line, I would be due to inherit land, the farmhouse B&B and also the surrounding stone buildings.
In order to qualify for CAT tax farm relief, 80% of my assets need to be deemed to be of an agricultural nature (after taking inheritance into account). Our family accountant (farm tax specialist) thinks that everything I am due to inherit would be classified as agricultural (including partially converted buildings). Now the accountant does a good job enough but he appeared to be a bit rusty on the finer points of the CAT tax situation. I have consulted other accountants (recommended by tax institute) about they could not give me a definitive answer as regards if everything would qualify as farm assets.
I tried to confirm this with the Revenue CAT tax section but they only told me that the B&B and self catering accommodation would qualify for business relief. They did not explicitly state that the entire would not qualify for farm relief (due more to the man in hatch not knowing too much about the specifics of the relief’s).
I am afraid that the self catering etc may be classified as business assets (as opposed to farming assets e.g. agri tourism) and thus I would not qualify for farm relief on the land as I would not meet the 80% rule (especially as I would like to convert more of these buildings).
It is also likely that as time progresses I would not be able to fulfil the 80% agricultural asset threshold for farm relief so therefore I may have to try and rely on business relief either way (if possible).
The Revenue business relief guide states that in certain circumstances farm land may be classified as a business asset, thus it may possibly tie in with the B&B and self-catering for business relief purposes (???). The only drawback of this I imagine is that a portion of the B&B used for residential purposes would not qualify for business relief whereas the full house would qualify as a farmhouse under agricultural relief (should not be too big an issue).
Although I am deemed to be a “young trained farmer” the family solicitor has advised against transferring any assets during my mothers lifetime, which is fair enough.
Can anyone tell me in what circumstances farm land qualifies for business relief and if land, farmhouse and self catering can be combined for business relief purposes? Is there any obvious drawback of me trying to qualify under business relief solely?
As mentioned if I continue to convert further buildings the money I am pumping into the conversion project could end up costing me more in the long term.
Tom