Capital Gains ‘catch’ on sale of conacre land

FARMERS – many of them in the elderly category – who decide to sell land they had previously rented on a conacre basis, may now be liable for Capital Gains Tax (CGT) on the transaction.

The ‘anomaly’ that has arisen since December 31 last, has been highlighted by Fine Gael councillor, Jimmy McClearn, who told the Farming Tribune that he would be bringing the matter to the attention of the Minister for Agriculture, Michael Creed.

According to Cllr. McClearn, from 2014 through to December 31, 2016, farmers who had land rented on a conacre basis, could decide to sell of their lands without being subjected to Capital Gains Tax.

He said that since December 31 last, farmers ‘selling on conacre land’ would be liable to Capital Gains Tax on the increased value of the land from the time that they had started to rent it out for conacre.

“Over the past few weeks, a number of agents and auctioneers have contacted me to point out this change and it is something that would be concern to farmers selling on land.

“Many of those farmers are now in the elderly bracket, who were excellent farmers in their day, but who now have no one to take over their farms, maybe because of emigration or other issues.

“I simply don’t know why this change came in and it may just have been an oversight. I would feel that if this issue is relooked at, by both Ministers Creed and Michael Noonan [Finance], that we can revert back to the status quo that applied to the end of last year,” said Cllr. McClearn.

He pointed out that farmers who were farming their land themselves were exempt from Capital Gains Tax on any sale of property that they were involved in.

In Budget 2017, according to the Citizens Information Board, a reduced Capital Gains Tax rate of 10% will apply to the disposal of – in whole or in part – of a business up to an overall limit of €1 million in qualifying chargeable gains.

For example, if a business had an original valuation of €100,000 and was subsequently sold for €200,000, it would be a subject of a CGT of 10% of the €100,000 difference – in this case €10,000.