A taxing issue for owners of farm dwellings
garded as Agricultural Property and qualify for relief.
The Revenue definition of Agricultural Property in this context which is ‘Farm buildings and dwelling houses (and the land on which they are situated) that are proportionate in size and character to the requirements of the farming activities’ does not really answer the question as every case is different.
Firstly, a farmhouse on its own, irrespective of whether it is in the middle of the farm or farmyard, is not deemed to be Agricultural Property but if that dwelling was transferred along with the farm, or part of it, it would be considered Agricultural Property. The question that this poses is: how much land should accompany the house in order to render it Agricultural Property?
Unfortunately there is no clear answer to this and one can only appraise each case on its merits.
For example, Revenue state that parcels of land of less than two acres are too small to be considered agricultural property and consequently a dwelling thereon is not Agricultural Property.
That does not mean that a dwelling on, say, ten acres is necessarily Agricultural Property as this may depend on the nature and extent of the agricultural activity being carried out on the ten acres.
That said, a house on ten acres or less could conceivably be regarded as Agricultural Property.
In practical terms the property should pass the ‘Elephant Test’. If it looks like an elephant, if it acts like an elephant and if it sounds like an elephant, well then it is an elephant.
In other words, you’ll know one when you see one. UK legislation is similar to Irish legislation on this subject and there have been a number of cases that have addressed this issue and in one such case it emerged that the following factors would appear to be relevant with regard to the character test in the context of a farmhouse:
• Is the house of a character appropriate by reference to its size, content and layout, with the farm buildings and the particular area of land being farmed?
• Is the house proportionate in its size, nature and requirements of the farming activities being conducted on the land?
• Would the educated rural layman consider it a farmhouse or a house with land?
• Is there is a history of agricultural production associated Do with the house?
As I stated earlier this matter is far from straightforward but where a reasoned common sense case can be made, most cases will get over the line.
Martin O’Sullivan is the author of the ACA Farmers Handbook.
He is a partner in O’Sullivan Malone and Company, accountants and registered auditors; www.som.ie