Plan tax reliefs before transferring the family farm

Farmers planning to transfer their farms to the next generation are being urged to seek professional tax advice well in advance of any transfer.

“The rules are detailed, conditions apply and every family’s circumstances are different,” James McDonnell, Teagasc Farm Management Specialist, said during the recent Teagasc webinar: Generational Renewal in Action: Real Farm Stories and Practical Solutions, hosted to mark the beginning of Generational Renewal Week 2026.

McDonnell noted that good succession planning is not about avoiding tax at all costs, rather: “It is about ensuring that the farm can pass to the next generation in a practical way.”

Three main taxes may apply when a farm is transferred, McDonnell explained. These are: Capital Gains Tax, Capital Acquisitions Tax and Stamp Duty. However, a number of reliefs may reduce or eliminate the tax due.

Capital Gains Tax applies to the person transferring the farm. The standard rate is 33%, based on the increase in the asset’s market value during the period of ownership.

“Retirement relief is the main relief available,” McDonnell explained. “Despite its name, you do not necessarily have to retire to qualify. There are several conditions, including owning and farming the land for at least 10 years before transferring it.”

Capital Acquisitions Tax (CAT) applies to the person receiving the farm. While the standard rate is also 33%, agricultural relief or business relief may reduce the taxable value of qualifying assets by 90%, subject to certain conditions, he explained. Also highlighted was the need to consider the successor’s previous gifts and inheritances within the relevant CAT group.

Also discussed was Stamp Duty, which may also apply to the person receiving the farm. The standard rate on non-residential property is 7.5%. However, Young Trained Farmer Relief may reduce the liability to zero where the qualifying conditions are met. Consanguinity relief may also reduce the rate to 1% in certain transfers between blood relatives.

James McDonnell also encouraged farmers seeking more information on tax planning to join the Agricultural Tax Reliefs and Collaborative Farming Options for Farm Families webinar, scheduled to take place this Thursday, September 10.

For more information, watch the full webinar: ‘Generational Renewal in Action: Real Farm Stories and Practical Solutions’ below, which also featured contributions from Emma Dillon, Ruth Fennell and Klara McGriskin, Teagasc, along with drystock farmers John and Joe Atkinson and dairy farmers, Lar and Lauren Kinsella:

For more from Teagasc Generational Renewal Week, visit here.

More from Teagasc Daily: Generational renewal a critical challenge across the EU