Macra national president Seán Finan has welcomed the extension of the farm restructuring capital gains tax relief. Currently, the exchange of land via sale is minimal in Ireland. ‘‘Farm restructuring capital gains tax relief has a crucial role to play in providing young farmers with access to land and reducing land fragmentation by allowing farmers to consolidate their holdings in a tax-efficient manner,” Finan said.
Macra’s successful lobbying for the introduction of farm restructuring capital gains tax relief, as far back as 2012, is still yielding dividends to the farming community. The relief is aimed at reducing the amount of land fragmentation, therefore benefiting all farmers.
But what exactly is the relief?
Capital gains tax is applied on the sale of land at a rate of 33%. It is charged on any increase in the value of the land from the time it was acquired to when it is sold and it is charged to the person selling the land.
For example, if land was bought at a cost of €100,000 and was sold at €150,000, the increase in the value of the land by €50,000 will be taxed at a rate of 33%, ie the farmer will have to pay €16,500 in tax.
In simple terms, farm restructuring capital gains tax relief means that the farmer is exempt from having to pay this tax when selling and buying land once certain criteria are met.
Firstly, the land being exchanged must decrease farm fragmentation. This means that the land being purchased must be closer to the main land holding than the land being sold, therefore improving the operation and viability of the farm. Secondly, the sale and purchase of land must occur within 24 months of each other. To qualify for the relief, a farm restructuring certificate, issued by Teagasc, must be completed.
More information on farm restructuring capital gains tax relief can be found at https://www.agriculture.gov.ie/media
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