We have provided below a quick synopsis of the recent changes to Agricultural Relief but you can obtain more detailed information on the Irish tax office website.
Provided the recipient fulfils certain conditions below for Agricultural relief, any gift or inheritance of agricultural property is valued at only 10% of the market value of the property for capital acquisitions tax purposes which is a significant benefit for the recipient.
This relief has been amended in Finance Act 2014 to take account of recommendations of the Agri-Taxation Review, designed to ensure productive use of agricultural property.
The new rules apply where both the gift/inheritance and the valuation date occur on or after 1 January 2015. To qualify for the relief:
1 The beneficiary qualifies as a ‘farmer’ if on the valuation date the beneficiary’s agricultural property comprises 80% of the beneficiary’s total property at the valuation date.
In addition, you must fulfil one of the following criteria.
2(a) The beneficiary is the holder of any of the qualifications set out in Schedule 2, 2A or 2B to the Stamp Duties Consolidation Act 1999, or who achieves such a qualification within a period of 4 years commencing on the date of the gift or inheritance, and who for a period of not less than 6 years commencing on the valuation date of the gift or inheritance farms agricultural property (including the agricultural property comprised in the gift or inheritance) on a commercial basis and with a view to the realisation of profits from that agricultural property, or
2(b) For a period of not less than 6 years commencing on the valuation date of the gift or inheritance spends not less than 50 per cent of that individual’s normal working time farming agricultural property (including the agricultural property comprised in the gift or inheritance) on a commercial basis and with a view to the realisation of profits from that agricultural property, or
2(c) Leases the whole or substantially the whole of the agricultural property, comprised in the gift or inheritance for a period of not less than 6 years commencing on the valuation date of the gift or inheritance, to an individual who satisfies the conditions in paragraph 2(a) or 2(b).”
Agricultural relief could be clawed back where the above conditions cease to be satisfied within 6 years.
The above is a general commentary on the rules of CAT Agricultural Property Relief. The tax implications of specific cases will depend on individual circumstances. If you think the above might be relevant for you, specialist advice should be obtained. CAG Chartered Accountants has considerable experience in this area and we would be happy to discuss the various issues with you.
