Agricultural Relief can provide Capital Acquisitions Tax relief of up to 90% on gifts or inheritances of qualifying agricultural land and property.
Capital Acquisitions Tax (CAT) is a tax on gifts and inheritances received by individuals. The amount of CAT payable depends on the relationship between the parties, and there are three group thresholds in Irelands broken down by these relationships.
There are a number of reliefs available for CAT, one of the most important being agricultural relief. If applicable, agricultural relief reduces the market value of the agricultural property to a 10% agricultural valuation.
There are strict requirements which need to be met in order to qualify for this relief, including the following:
The property being gifted must be deemed to be agricultural property.
The transferee must meet the financial ‘farmer asset’ test, meaning that at the date of the gift at least 80% of the market value of all the property the transferee owns must be agricultural property.
The transferee must also meet the requirements of the ‘active farmer’ test. The transferee must be the holder of a relevant ‘trained farmer’ qualification and must spent at least 50% of their normal working time farming on a commercial basis for at least six years from the date of the gift.
However, an important aspect of agricultural relief is that there may be a ‘clawback’ by the Revenue.
If the transferee does not maintain the requisite standards for at least six years, or if they dispose of the land within six years, the agricultural relief obtained is entitled to be ‘clawed back’, meaning the full CAT amount (100% of the market valuation) would be liable to the Revenue.
If the transferee decides to sell a portion of the agricultural property within the clawback period of six years, the amount to be paid back to the Revenue is calculated by looking at the proportional value of the land being sold.
Disclaimer
In contentious business, a Solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.
This information is for guidance purposes only. It does not constitute legal or professional advice. Professional or legal advice should be obtained before taking or refraining from any action as a result of the contents of this publication. No liability is accepted by McElhinney & Associates for any action taken in reliance on the information contained herein. Any and all information is subject to change.
About the Author
Jolene McElhinney, BBLS, Principal Solicitor
Jolene McElhinney is the founding principal of McElhinney & Associates, renowned for her expertise in employment law and personal injury claims across the North West of Ireland. With a distinguished academic background and over a decade of experience, Jolene is dedicated to providing personalised, expert support to her clients, ensuring they navigate the complexities of the legal landscape with confidence and clarity.
