My mother wants to gift me a few fields with a total value of about €400,000. I already own land valued at €100,000, which I bought a few years ago using €100,000 my father gave me at the time, on the clear condition that it was to be used to buy land.

Both of them have farmed all their lives and I hold the Green Cert. Is there any tax to pay, how is it worked out, and when would it be due?

ANSWER: This is a very common family succession scenario and, with proper planning, it can be dealt with in a highly tax-efficient way. Between Capital Acquisitions Tax reliefs, retirement relief and stamp duty reliefs, it is quite possible for the fields to transfer with little or no tax – provided the conditions are met and the paperwork is handled correctly.

Capital Acquisitions Tax (CAT)

A gift of land from a parent to a child normally falls within the Group A CAT threshold, which currently allows a child to receive up to €400,000 tax-free over their lifetime. This threshold applies to gifts from both parents combined.

In your case, the proposed transfer from your mother is valued at €400,000. On its own, that would fully use the threshold. However, the earlier €100,000 gift from your father also needs to be considered.

Crucially, that cash gift was given subject to a binding condition that it be used to buy agricultural land, and it was used exactly for that purpose.

Where this happens, the legislation treats the benefit as agricultural property, meaning Agricultural Relief applies.

Although the original cash gift was €100,000, only €10,000 counts as a taxable benefit for CAT purposes after the 90% relief. It is that reduced amount which uses up part of your Group A threshold.

Agricultural Relief

Agricultural Relief reduces the taxable value of qualifying agricultural property by 90%, provided certain conditions are met.

The land being transferred must be agricultural property, which the fields clearly are. You must also satisfy the 80% agricultural asset test, meaning that after the gift at least 80% of your total assets must consist of agricultural property.

After the transfer, you would own farmland valued at €500,000 in total, putting you in a strong position, though this test always needs to be checked carefully. A family home, savings or other investments can quickly tip the balance where values are tight.

The land must also continue to be farmed, either by you directly or under a qualifying long-term lease. As you hold the Green Cert, the farmer requirement should be satisfied.

On the facts outlined, Agricultural Relief should apply to the full €400,000, reducing its taxable value to €40,000. Combined with the earlier received gift, you remain within the Group A threshold, so no CAT should arise.

Capital Gains Tax (CGT)

CGT is a consideration for your mother, as transferring land is treated as a disposal. However, Retirement Relief is designed to facilitate family farm transfers.

Provided she is over 55 and has farmed the land for at least 10 years, the transfer can proceed without CGT. Even where a parent is over 70, the €3m cap on transfers to children is well above the values involved here. In practical terms, no CGT should arise.

Stamp Duty

Stamp duty still applies unless a relief is claimed. At the standard rate of 7.5%, the duty on €400,000 of land would be €30,000.

If you are under 35 at the date of transfer, and hold the Green Cert, Young Trained Farmer Relief may apply, giving a full exemption from stamp duty, provided you farm the land for at least five years.

If you are 35 or over, Young Trained Farmer Relief will not apply, but Consanguinity Relief may still be available. Where the conditions are met, this reduces the stamp duty rate on farmland to 1%, provided the transfer is between close relatives and the land continues to be farmed for at least six years. These reliefs must be actively claimed when filing the stamp duty return.

Filing deadlines

Even where no tax is ultimately payable, the filing obligations still matter.

Stamp duty returns must be filed and paid within 44 days of signing the deed. A CAT return must be filed by 31 October of the year following the gift, even where no tax is payable. CGT obligations rest with your mother, though Retirement Relief should eliminate any liability.

This is a good example of how early planning and correctly structured gifts can significantly improve the tax outcome in farm succession.

On the facts provided, the land can pass with no CAT, no CGT and potentially no stamp duty, provided the reliefs are claimed correctly and conditions are met.

The key things to watch out for are the 80% agricultural asset test and meeting all filing deadlines.

Marty Murphy is head of tax at ifac, the professional services firm for farming, food and agribusiness.