Farm Ireland
Independent.ie

Wednesday 18 July 2018

Calls for changes to Capital Gains Tax relief on farms over 'unintended implications' of joint ownership

Many farming couples put land into joint names.
Many farming couples put land into joint names.
Ciaran Moran

Ciaran Moran

The Law Society of Ireland is urging the Government/Department of Finance to change a key rule Capita Gains Tax (CGT) Retirement Relief when transferring a farm.

Currently in order to claim the relief, the persons transferring the farm i.e. generally parents, must be 55 years of age or over and have owned and farmed the land for 10 years prior to the transfer.

The parents can lease out the farm for up to 25 years but have to have owned and farmed the land for 10 years prior to the first lease/letting.

However, the Law Society has said that many farming couples put land into joint names not realising that it could cause unintended CGT tax implications.

The question generally arises as to whether a female spouse is entitled to claim CGT Retirement Relief where she has been working off farm i.e. whether she can prove that she has farmed the land for 10 years prior to the transfer?

While the tax rules provide that a spouse can step into the shoes of the other spouse in satisfying the 10 year ownership requirement, the spouse can only step into the shoes of the other spouse in satisfying the 10 year usage requirement in a death situation i.e. where the spouse farming the land has died.

Law Society is recommending that the provisions for claiming CGT Retirement Relief should be amended to allow for a spouse/civil partner to step into the shoes of the farming spouse in terms of satisfying the 10 year ownership and usage requirement.

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