Farming is exposed to tax on income generated and tax on asset transfers, however reliefs and considerations apply.
Young Trained Farmers
- Qualify for 100% Stock Relief
- Qualify for Zero % Stamp Duty
These combined are subject to a lifetime limit. The Revenue age for a young trained farmer is under 35 compared to 40 for CAP.
There are three rates of stamp duty presently applicable
- 7.5% on land purchase and non- connected land transfers
- 1% within family land transfer
- 0% Spouse or civil partner
- 0% Young Trained Farmer Relief
Stamp Duty only applies to a within life transfer, there is no Stamp Duty at Death. However, waiting until death can have other implications including Fair Deal and the recipient lacking asset security.
Farmers over the age of 55 qualify for CGT retirement relief on the sale or disposal of land provided they have owned and farmed that land for at least 10 years prior to disposal, once 10 years farmed subsequent long-term leasing does not impact the relief.
CAT Agricultural Relief
CAT is payable by the recipient upon receipt of a gift or inheritance. Those in receipt of farms / farmland should always strive to qualify for Agricultural Relief. This relief reduces the value of the asset(s) by 90% for CAT (a €3m farm asset is treated as €300k for CAT purposes). Agricultural Relief applies when
- Upon receipt of the farm asset(s) 80% of the recipients’ assets are agricultural
- The recipient following receipt must actively farm or lease to an active farmer for at least six years. Active farming compliance is easiest for recipients with an agricultural qualification (Green Cert).
An alternative to Agricultural Relief is Business Relief.
Thresholds and Rates; CAT applies at 33% to the value of the asset in excess of the applicable threshold and said value having been adjusted for any reliefs (e.g., Agricultural Relief)
|Relationship to Disposer||CAT Exempt Threshold|
|Spouse or Civil Partner||No Limit|
|Child, minor grandchild if child deceased, favored niece of nephew||€335,000|
|Brother/Sister, Niece/ Nephew, Grandchild, Parent, Grand-parent||€32,500|
|Other / None||€16,500|
An Annual Gift Exemption of €3,000 also applies.
CGT typically applies at 33% to the value of the gain adjusted for the disposers annual exemption (currently €1,270). The gain at disposal is calculated as the difference between the Net Sales Price (if sold) or market value (if gifted) less the base cost. The base cost is purchase cost or market value / stamp duty values used when received by way of gift or inheritance.
Long-term Leasing Income Tax Relief
Income tax relief is available annually to landowners who lease their land Long-term for farming purposes.
|Lease Term||Annual Rental Income Tax Exempt per Landowner|
|5 or 6 years||€18,000|
|7, 8 or 9 Years||€22,500|
|Between 10 and 15 Years||€30,000|
|15 Years or more||€40,000|
- The amount of exemption is cumulative not per lease
- ental income includes land rent, any infrastructure charge and BPS/BISS value
- The relief is per landowner, a double threshold applies if joint ownership
- Should the lease terminate through no fault of the Owner there is no claw back of any tax relief
- Leases must be in writing, for a minimum of 5 years, and the land must be farmed by an active farmer
- Not all land needs to be leased
- Farm Leases of six years or more are relieved from stamp duty
- Normal personal tax allowances and reliefs remain available towards other
This Taxation Information is a guide and summary only, complete tax planning requires consultation with your professional advisors and consideration of all assets and all income streams.
Read more detail from The Land Mobility Service 2023 Booklet >>