Tax changes to spark surge in farm transfers
Published 26/10/2010 | 05:00
FARMERS have been urged to transfer land to their children quickly if they want to avoid hefty new taxes in the coming Budget.
Solicitors say they expect a surge in land transfers in the coming weeks as farm families seek to complete handovers before the taxman can come looking for a share.
Leading taxation expert Declan McEvoy said the tax bill for transferring large farms could amount to more than €200,000 if the Government moves ahead with Commission of Taxation proposals to reduce farm succession tax breaks.
He warned that even the transfer of small sites to children to build houses could incur a bill of around €10,000.
Mr McEvoy said farm families should consider transferring land to the next generation now before new measures were introduced.
"There may never be a better time than now to transfer given low land values and current relief rates," he said.
If a farmer waits till after the next Budget to hand over a farm worth €3m to a child, they could be hit with a tax bill of €226,000 if the Government goes ahead with proposals to reduce farm succession tax breaks.
The figures are based on a 200-acre farm -- but even an average farm of 100 to 120 acres could incur a €75,000 bill.
Solicitor John Hickey, of Kilkenny firm Poe Kiely Hogan Lanigan, said there was a lot of concern amongst farmers about measures that could impact on land handovers.
"There was a huge increase in the number of land handovers after the Commission on Taxation put out these proposals last year and we expect the same thing to happen next month as people try to get in before the Budget," he said, noting that 120 people had turned up for a seminar on the topic last Monday.
Mr McEvoy said that the new Civil Partnership law would also have a huge impact on farmers as partners living on a farm could have a claim on it if the relationship broke down, he said.
"Our friends in the legal profession are going to have great fun with this as it will be an opportunity to make a lot of fees out of very personal situations," he said.
The Department of Finance said that they could not comment on Budget proposals for tax changes but everything was being considered.
They said, however, that the figures of potential tax liabilities of over €200,000 on transferring large farms if the Commission proposals were introduced were broadly accurate although there could be variables that would reduce that figure.
The Irish Farmers' Association said that the sector was in the early stages of recovery and support was needed to ensure future growth.
"It is important that incentives through the taxation system for investment, modernisation and restructuring are retained," said IFA farm business chairman James Kane
The Department of Agriculture said taxation issues were a matter for the Department of Finance.