The planning and execution a family farm transfer is a matter which requires careful consideration and planning.
In addition to practical concerns and familial dynamics, there is also the issue of how tax may or may not apply.
In her newly published book Farming and the Law, Karen Walsh solicitor covers a huge range of legal issues for farming families, this extract draws particular attention to the scheme known as Young Trained Farmer Relief which could prove to be of benefit and savings.
Law book extract
There is another stamp duty relief, known as Young Trained Farmer Relief, which provides a full exemption from stamp duty for those who meet the necessary criteria.
A recipient of a gift of farmland — or the purchaser of farmland — qualifies for Young Trained Farmer Relief if he or she is under the age of 35 years at the date of the transfer and he or she satisfies the appropriate agricultural requirements.
The transferee, including the partners, or the working director in the case of a company, must:
- Be the holder of (or, within a period of four years from the date of the conveyance or transfer, become the holder of) an appropriate educational qualification (which is historically known as a ‘green cert’); and ...
- Spend not less than 50% of the individual’s normal working time farming land (including the land conveyed or transferred).
As is clear from the above requirements, Young Trained Farmer Relief is only available in the case of a transfer or sale of land, where the individual subsequently farms the land for the required period.
Young Trained Farmer Relief does not apply in the case where the land is subsequently let.
Unlike the capital acquisitions tax (gift tax) rules, the Revenue Commissioners have not defined what is meant by ‘normal working time’, and, in light of this, persons hoping to benefit from Young Trained Farmer Relief should, in the interests of prudence, rely on the literal meaning and spend at least 50% of their working time farming.
There are a number of additional observations on the issue of Young Trained Farmer Relief.
The relief only applies where all purchasers or recipients have the appropriate qualifications. As such, a transfer of a share of a farm holding, such as putting the family farm into joint names with a successor son or daughter, would not benefit from the relief.
The only exception to this rule is where the land is being transferred into the joint ownership of spouses or civil partners.
Where a purchaser or recipient of farmland is under 35 years of age at the point of purchase or transfer, but has not obtained the relevant qualifications, stamp duty will apply on the purchase or transfer under normal rules.
However, he or she can obtain a refund of the stamp duty paid where he or she acquires the necessary educational qualification within four years from the date of execution of the deed of transfer or deed of conveyance, and an application for the refund is made within the appropriate time frame.
The exemption granted will be clawed back if the land is disposed of within five years from the date of execution of the deed of transfer or deed of conveyance and is not replaced by other land within one year of disposal.
Stamp duty does not apply in the case of transfers under a will or intestacy.
The current regime of Young Trained Farmer Relief is legislated for until December 31, 2018.
So let’s look at two different scenarios:
- In the first case, Patricia transfers her farmlands to her son, Kevin. Kevin is 38 years of age, so he is over the age at which it would have entitled him to qualify for Young Trained Farmer Relief. Patricia is 65 years of age. Consanguinity relief applies, and stamp duty of 2% is reduced to 1%. The farmlands have a value of €1,000,000. The stamp duty payable is €10,000.
- In the second case, Daniel transfers his farmlands to his nephew, Joseph. Joseph is 33 years of age and has obtained an appropriate agricultural qualification.
The farmlands have a market value of €2,000,000. He does not have to pay any stamp duty on the deed of transfer or deed of conveyance as he qualifies for Young Trained Farmer Relief.
* Extract from Farming and the Law, Karen Walsh, published by Clarus Press, (RRP €35)
While every care is taken to ensure accuracy of information contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal advice in relation to your particular circumstances at the earliest possible time.