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Farming & Fisheries

The family farm: a very delicate issue

June 12th, 2022 11:40 AM

By Southern Star Team

The family farm: a very delicate issue Image
Pick the right time and place to have an open discussion on land ownership. (Photo: Shutterstock)

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THERE is hardly a day goes by in my profession that John B Keane’s powerful play ‘The Field’ isn’t invoked.

It is one play that gets deep into the soul of Irish people. Compared to other nations, Irish people have a huge attachment to property ownership, but nothing can be as contentious as the family farm.Over the years land has become very valuable, rising much faster than the rate of inflation. For instance, over the 40-year period from 1980 to 2020 it has increased in value from €2,135.95 to €10,316.00 per acre – far ahead of the rate of inflation. However, the reality is that the income derived from such a valuable asset in no way compensates for its huge asset value.

When a farm has been built up over generations, there is huge possibility for arguments and division to develop. The sad reality is that it is a topic that is very rarely discussed in households as it is very sensitive and considered taboo.

Traditionally farmers have been very poor at expressing their feelings. However, it is always better to be open about such issues. If an argument is going to develop it is better to have it sorted sooner rather than later.

Pick the right time and place to have an open discussion on the matter. It is important that every stakeholder has their input. If the meeting gets too agitated, it is better to adjourn it to another time.

All families are unique and some members may exert more influence than others. Many potential disagreements can be avoided by open discourse and conversation.

It is important to get the correct professional advice and it may be worth considering engaging a mediator. Unfortunately, there will be situations where it is impossible to get consensus.

Some siblings may have contributed significantly to the farm over the years. They may have an expectation of obtaining a site or some other form of monetary compensation.

It is important that they are allowed to express their feelings and expectations. Such involvement will avoid friction. Unfortunately, if farms are divided between family members it can make them too small and unviable.

The future care and income need of the transferor cannot be disregarded. One also needs to be aware of the Fair Deal Scheme and any implications if could have on the farm transfer. Since October 2021, the financial contribution based on the farm is limited to three years once a family successor continues to work the farm for six years and the transferor worked the asset up to the time of transfer.

Obviously, taxation issues need to be carefully examined. There are three main taxes associated with property transfers, namely Capital Gains Tax, Capital Acquisitions Tax and Stamp Duty. There are various reliefs from all of these taxes and if managed correctly it should be possible to transfer a farm with very little tax.

A farm transfer is a process and not an event. It needs to be carefully planned and thought out. Sometimes there are no successors and when this is the case one needs to study their options. With any decision it is vital to get the appropriate professional advice. As mentioned at the outset land goes to the care of Irish people. The main thing is to keep talking. A problem shared is a problem halved.

Micheál Collins is an accountant with FDC in Bantry and Skibbereen.

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