Pitfalls abound when transferring a farm and careful planning is essential, accountant Micheál Stafford told a Wexford IFA meeting on Monday.
While there is widespread awareness around Capital Acquisitions Tax for a farm inheritor, he highlighted the importance of taking stock of the rules around Capital Gains Tax for the person disposing of the farm asset. He told the Enniscorthy meeting that for people between 55 and 69, the threshold for CAT is €10m, but that shrinks to €3m for those over 70. In relation to people inheriting land, he warned to be aware of how rocketing property prices mean a homeowner might fall foul of the 80% asset rule.
With current land prices extending up to €25,000 an acre in some cases, a 65ha (160ac) farm could meet this threshold.
Solicitor John Murphy advised all farmers to make a will, and to make it for the family situation as it is, not as it might be in the future. He highlighted the option of appointing trustees where the beneficiaries of a will are still children.
IFA deputy president Alice Doyle brought the meeting through the complexities of the Fair Deal scheme. She explained how farmers who lease land are effectively ruled out of availing of the three-year cap on their farm asset as long as the lease in place.
She highlighted that while someone entering the Fair Deal scheme while still owning farmland must appoint a successor, but that person might not necessarily have to be the person who eventually inherits the land. “Successor in this case means the person you are asking to run the farm for the next six years,” she said.
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