Discussion in 'Tax' started by jackswift, May 17, 2008.
My brother inherited land from an aunt. He is not a farmer, can he still claim agricultural relief?
If it is an inheritance then you are talking about CAT relief. The test depends on the value of his assets including what he is inheriting. If agricultural assets are over 80% then he can qualify for the agricultural relief. If he does qualify then the value is reduced by 90% for tax purposes. He must remain resident for 3 years and cannot sell for 6 years. There are other provisions but his tax adviser will advise.
Since the question is in the tax forum I'd assume its a q of what is the tax definition of "farmer" for agricultural relief under CAT rules. As I understand it that is solely a requirement that 80% of assets are agricultural. You could be an astronaut or brain surgeon but once 80% of asseta are agrucultural voila - you're a farmer.
I since got more information about ag relief inheritance tax. You must be a farmer to claim it read this.
Plain and simple you cannot claim to be a farmer if you inherit land and have never farmed before.
Following on from Vanilla's reply - which is correct.
The relevant tax here in Capital Acquisitions Tax because there would not be any CGT or stamp duty on the inheritance.
There is no need to be an actual farmer to avail of agricultural relief from CAT, the test is a test on the assets that your brother holds. As Vanilla pointed out, at the "valuation date" at least 80% of his assets (including those that he is inheriting) need to be agricultural assets. Agricultural land, machinery etc all count as agricultural assets. The legislation was recently changed so that if he owns a house (that is not a farm house) then any mortgage on that house can be taken off the value of that house when calculating his total agricultural/non-agricultural assets.
The most important thing is that even if your brother does not qualify as a "farmer" now, he can qualify by the valuation date if he re-jigs his assets. For example I heard of a situation recently where a wife transferred her family home into the sole name of her husband in order to qualify as a "farmer" for CAT purposes by the valuation date. The valuation date differs for every administration but it can be (at least) a few months after your aunt's death. Depending on the value of the inheritance it would definitely be worth looking into the possibility of your brother "becoming" a farmer by the valuation date.
Helpful link. But I disagree with your interpretation. This is what it says:
To qualify for Agricultural Relief the beneficiary must be a farmer. This means that you must be domiciled in Ireland and, taking the gift or inheritance into account, agricultural property must account for at least 80% of the gross market value of your assets on valuation date. This restriction does not apply if the gift or inheritance is trees or underwood
From Revenue Leaflet IT39
What is a “Farmer”?
Farmer in this context does not refer to the occupation of the beneficiary. Rather, to qualify as a “farmer” a number of conditions
must be met by the beneficiary at the valuation date:
- be an individual (companies do not qualify);
- domiciled in the State;
- at least 80% of the gross market value of whose assets is represented, on the valuation date, by agricultural property -
after taking the gift or inheritance into account.
Note that no test, i.e. farmer percentage test or domicile test, is necessary in respect of a gift or inheritance of trees or
A beneficiary who qualifies for agricultural relief must be resident in the State for all of the three tax years immediately following
the tax year in which the valuation date falls or the relief granted will be withdrawn.
So you are a farmer if you are domiciled in Ireland and 80% of your assets are made up of agricultural property. No other qualifications mentioned.
Although the OP was not clear in his question, it is quite clearly about tax relief.
He is not interested in your thoughts on what a farmer is and what REPS is.
Please stick to the topic.
This is quite technical, so maybe avoid replying if you have nothing to say.
This is incorrect.
I think the tax definition of a farmer (in relation to agricultural relief from CAT) is highly relevant. The OP's brother will qualify for the relief if he fulfills the Revenue's definition of "Farmer".
Separate names with a comma.