The lim­its of agri­cul­tural relief

Irish Independent - Farming - - FINANCE FARMING -

farm the land him­self, but rather he is go­ing to lease it to a qual­i­fy­ing farmer, he is sub­ject to sat­is­fy­ing the 75pc con­di­tion as re­ferred to above.

He has no use for the stock and ma­chin­ery and these will have to be dis­posed of.

Fur­ther­more, be­cause he is not go­ing to farm the hold­ing and re­side in the farm­house, the house no longer qual­i­fies as be­ing in use for qual­i­fy­ing farm­ing pur­poses.

As the house, land and stock com­prise 32pc of the to­tal, the land only makes up 68pc, thereby fall­ing well short of the 75pc min­i­mum limit.

This par­tic­u­lar con­di­tion only came into play in the 2014 leg­is­la­tion — where suc­ces­sors were al­lowed to lease out the farm to a qual­i­fied or full-time farmer.

Any per­son con­tem­plat­ing suc­ces­sion, par­tic­u­larly where the farm is likely to be leased out, would need to be mind­ful of this 75pc rule.

In this par­tic­u­lar case John will face a tax bill of €186,780 if he fails to qual­ify for Agri­cul­tural Relief.

Op­tions

The ben­e­fi­ciary, John in this case is lim­ited in his op­tions for the rea­son that he does not in­tend to farm the land him­self. How­ever, there are a num­ber of ac­tions that could be con­sid­ered such as: • Re­visit the land and dwelling valu­a­tions and see if there is any le­git­i­mate scope for ad­just­ment. Valuers of­ten tend to err on the side of caution by pitch­ing land values to­wards the mid or lower end of the cur­rent mar­ket Do value spread in an­tic­i­pa­tion of a pos­si­ble tax li­a­bil­ity aris­ing, whereas in this case the higher the land value, the bet­ter in terms of ex­ceed­ing the 75pc thresh­old. • Con­sider rein­vest­ing the pro­ceeds of sale of the stock and farm ma­chin­ery on the farm in, say, a new farm build­ing. This would mean that the 75pc thresh­old could be sat­is­fied.

Martin O’Sul­li­van is the au­thor of the ACA He is a part­ner in O’Sul­li­van Malone and Com­pany, ac­coun­tants and reg­is­tered au­di­tors,

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