Michael (85, RIP) and Mary (75) have one daughter Louise (36). Michael died six years ago and left everything to Mary. Mary has taken charge of the property (dwelling, associated old farm buildings, and 90ac of land - not zoned but beside zoned land). For the last six years, the farm has been leased to a neighbouring cattle farmer. Mary purchased a small house in the town and is now in a position to leave everything to Louise. Louise is a qualified pharmacist living in Dublin. What are the implications of the new changes?

The changes, as outlined in the budget, are two-fold for Louise and Mary. The €400,000 threshold applies immediately from 2 October 2024.

The new rules on agricultural relief apply from 1 January 2025. This means that Louise must have owned it and farmed it or leased it to an active farmer for six years. If it is a lifetime transfer, three taxes will apply – stamp duty and gift tax for Louise and Capital Gains Tax (CGT) for Mary.

Mary will meet the conditions for the relief and therefore no tax is due.

If transferred before the end of the year, the new rules on the holding period for Mary do not apply.

Louise will have to meet the asset test, ie that 80% of her assets on the day of transfer are invested in farming assets and if she meets same, she will get a reduction in value of 90% of the farm asset.

In order for Louise to get agricultural relief, she will also have to meet the active farmer test and therefore continue to lease for another six years.

If everything is left by a will to Louise and Mary survives to year end – Mary will have to continue to lease the land until she passes or choose to do a lifetime transfer.