Concerns over the Fair Deal nursing home scheme and when to transfer the family farm to a child who is working off the farm are among the most common queries Teagasc deals with when it comes to farm succession.
Teagasc financial management specialist James McDonnell told the Irish Farmers Journal that farmers frequently seek advice on what to do about their farm when none of their children are interested in farming at all, or want to farm, but not yet.
“Some children are interested in coming home to farm, but not yet,” he explained. “They might have a good job or else the farm is small, so it will never provide a full-time income for them.”
Eligibility for nursing home scheme
In some cases, the parents are worried about the timing of the farm transfer and what implications it might have for their eligibility for the Fair Deal nursing home scheme in later years.
“It may be the situation that the parents transfer the farm to the child and rent the land back to retain the use of the farm, but the farm is beyond the reach of the Fair Deal scheme when the time comes,” McDonnell said.
Keeping a right of residency in the farmhouse when transferring the farm is another common query.
“In that situation, we would be advising that the person consult their solicitor for the correct advice,” he said.
However, McDonnell also cautioned that getting the correct tax advice before moving to make legal changes is extremely important.
“I’ve come across situations where people went to their solicitor first and were instructed to make changes, but then were left with a big tax bill to pay that could have been avoided,” he said.
He cited the example of a child who was to inherit a 300ac farm, but when the transfer was being done, they had already used up much of their Capital Acquisitions Tax allowance by valuing a site for their house very high.
“There is a risk of being penny-wise and pound-foolish,” the Teagasc financial adviser warned. “Get both the tax advice and the legal advice before making any decisions.”
However, he also warned farmers against “kicking the can down the road” and leaving farm succession decisions too late, because of the risk of missing out on key tax reliefs and farm scheme incentives.
Teagasc is hosting a series of Transferring the Family Farm Clinics in early October, where farming families can seek advice on all aspects of farm succession.