Saturday 14 December 2019

Margaret Donnelly: A farm is not just a home or asset, it's often a family's livelihood too

'Farms are not just a capital asset, but they are the means by which farm families try to earn a living.' Stock Image
'Farms are not just a capital asset, but they are the means by which farm families try to earn a living.' Stock Image
Margaret Donnelly

Margaret Donnelly

No-one is disputing that farmers should pay their way. But there needs to be a realisation that for many elderly farmers in this situation, their livelihood and home are one thing.

And with farms passed down from generation to generation, no-one wants to be the family member who sells that farm.

Under the Fair Deal scheme, some farm families may have to sell the farm to pay back nursing home fees for elderly family members.

At the moment, a farm as an asset is exempt if it has been passed on to someone else - ie a family member - more than five years ago.

This five-year exemption means that it will not be taken into account when an assessment is being made on the elderly person's ability to pay nursing home fees.

That is fine while everyone in the farm family is young and healthy, making long-term plans as they will go through the most tax-efficient process to transfer such assets.

But currently, if a farmer has held onto the farm for whatever reason and has not signed it over to the next generation, then it is still a part of their assets and that will be taken into account in their ability to make repayments.

Then, if a farmer has to go into a nursing home for a long-stay condition, the entire farm is at risk, as there is no upper limit on how much the State can claim back to pay for this care.

So, in many cases farm families are looking at having to sell their farm and livelihood to pay this debt.

Farms are not just a capital asset, but they are the means by which farm families try to earn a living. And I use the word try. Because the facts around farming incomes show that the average farm income in Ireland is paltry.

In many cases it's not enough to provide a viable income and farm families are reliant on off-farm income or in some cases, social welfare payments. Approximately 70pc of farms have a farming income of less than €26,000, an income that will make little impact on a possibly large long-term nursing home bill that may be coming down the road.

There needs to be a realisation that farm families are facing increasing financial stress from these situations, whey they may be forced to sell part of their asset, that is also part of their income.

Without this realisation, many farm families will have no choice but to sell the farm to pay the bills.

Then they will look to the next generation to borrow to buy back the family farm.

At the moment farm families are not looking for loop holes to avoid paying their bills.

They are trying to grapple with situations where they simply don't have the funds to pay the bills.

This can mean the only option being presented to them is to sell the working asset that is providing some of their income.

If it comes to pass that 90pc of farm assets may be exempted from the assessment for nursing homes, it would be welcome by farmers - and all small business owners.

Something must be done to ensure families are not saddled with six-figure bills and to remove the stress and worry from the elderly during their twilight years.

Irish Independent

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