AGRICULTURAL PROPERTY – Transferring the family farm: A brief guide to Agricultural Relief in Capital Acquisitions Tax

The Agricultural Relief Scheme creates an exemption for those being gifted or inheriting agricultural land which would otherwise be subject to Capital Acquisitions Tax.

Normally, any gifts received or inherited would be taxed at a rate of 33% over a certain amount that varies depending on the person’s relationship to the donor.

However this is not the case when the donor is a Farmer and the lands are continued to be used for agricultural purposes.

A farmer is considered under the scheme as someone with 80% of their gross property (after receiving the gift or inheritance) consisting of agricultural property.

The scheme operates by offering a 90% reduction on how the market value of the property is calculated. Therefore if the total value of the lands is €5 million, the recipient will only be taxed on the sum of €500,000.

The relief is Dependent on the property not being sold within six years of receipt. If it is sold in order for it to be replaced, this must be done within one year, otherwise the benefits will be withdrawn by the Revenue.

The benefits of the scheme are clear as it allows for a farming business to continue to run and operate within the family without the need for it to be sold in order to satisfy a debt to the Revenue.

The scheme also covers the gifting of a farm to a niece or nephew. This is known as ‘Favorite Nephew Relief’ and applies to nieces, neph¬ews, brothers, sisters and step or adopted children who have worked between 15 and 24 hours a week on the farm.