When it comes to tax reliefs, a lot of farmers may be missing out on the potential options available to them. In good times, a lot of us tend not to bother looking into the additional tax exemptions that we may be entitled to. But these are not good times for the agricultural community in this country. Rising production costs and (in some sectors at least) cratering market prices mean that most of us are starting to feel the financial pinch. With this in mind, we at Agridirect.ie have consulted the Government website and put together this short overview of the tax reliefs currently available to Irish farmers in relation to the transfer, sale and lease of land. We hope you find it useful!
Consanguinity relief is a tax relief that applies in instances of land transfer between family members. In order to claim relief, the applicant must fulfil both of the following criteria:
- be related to the person transferring the land to them (for example, they may be father and son, or uncle and nephew)
- farm the land for a minimum of six years, or lease it to a third party who will farm it for a minimum of six years
If you are farming the land yourself, Revenue requires you to be registered for Income Tax. Furthermore, you must hold a specified farming-related qualification or gain one within the first four years of obtaining the land in question.
Alternatively, you may be eligible if you spend at least 50% of your time farming land (including this land transfer).
In cases where you are leasing the land to a third party (instead of farming it yourself), the person leasing the ground must be in possession of a specified qualification or obtain one within a period of four years from the date of acquisition of the land; or alternatively spend at least 50% of their time farming land (including this land transfer).
There are additional stipulations in relation to this tax relief. Notably, the person transferring the land must be under the age of 67 at the time of the land transfer. However, according to the Government website this condition is applicable only to transfers signed on or after the 1st of January 2016 and before 25th December 2017.
Young Trained Farmer Relief
The Young Trained Farmer Relief is a tax relief policy that is of interest to many farmers of the younger generation. To claim tax relief as a young trained farmer you must meet the following conditions:
- be under 35 years of age
- hold a relevant agricultural qualification
- have submitted a business plan to Teagasc
- be registered for Income Tax
- be the head of the farm holding
In addition to this, you must also intend to do the following:
- spend at least 50% of your normal working time farming the transferred land
- retain ownership of that land for at least five years following the date of the land transfer
The Young Trained Farmer Relief EU State Aid. This means that certain restrictions are in place regarding the maximum amount of relief that can be claimed by any one application. These restrictions apply to all transfers executed on or after the 1st of January 2019. Nonetheless, all young farmers with a Green Cert who meet the additional criteria should apply for this relief.
Farm Consolidation Relief
Farm Consolidation Relief can be availed of by farmers who spend the majority of their working time on the farm. To be deemed eligible for relief, you must spend at least 50% of your normal working time engaged in farming. If you are purchasing land as a joint owner, only one of the partners must be a farmer.
In addition to the above, to be deemed eligible you must:
- sell land and buy other land to consolidate your holding
- sell and buy within 24 months
- have a consolidation certificate issued by Teagasc.
Furthermore, you must also intend to do both of the following:
- retain ownership of the land
- use the land for farming for a period of at least five years from the date you claim the relief.
Revenue makes it clear that the instruments effecting the sale and the purchase must be signed on or after the 1st of January 2018 and before the 30th of June 2023. Stamp Duty must be paid on the difference between the price at which you sold land and the price at which you bought other land.
Relief for Leases of Farmland
The final tax relief available in terms of land lease, transfer or purchase is relief for leases of farmland. To be deemed eligible for this relief, you must meet one of the two following conditions:
- hold a specified qualification or obtain one within a period of four years from the date of the lease
- spend at least 50% of your time farming land (including this land transfer).
Furthermore, the relevant lease must meet both of the following stipulations:
- be executed on or after the 1st of July 2018
- be for a period of at least 6 years and less than 35 years.
As in the case of the Young Trained Farmer Relief, this relief is provided through EU State Aid. Therefore, restrictions apply to the amount of relief that one applicant can claim.
