New rules from January 2024 that will restrict tax relief earned on leasing farmland, unless it has been owned for seven years, have been welcomed by Sinn Féin’s spokesperson on Finance and Public Expenditure and Reform, Pearse Doherty.
Changes to the Land Leasing Income Tax Relief were introduced in Budget 2024 by the Minister for Finance, Michael McGrath in order to ensure that the relief does not become “immediately available” to anyone who buys land.
From January 2024, a seven-year holding requirement will restrict the income tax relief available on long-term leasing of farmland.
Recent amendments to the Finance Bill, the legislation to implement Budget 2024, have sought to address concerns put forward by farm organisations about how this holding requirement might impact on inheritance or transfers of land.
Farmland
Minister McGrath has told the Dáil that the “requirement to own the farmland for seven years prior to letting it out under a ‘qualifying lease’ will not apply to individuals who have acquired the land other than by way of purchase e.g., by inheritance or gift”.
“These individuals will still be in a position to make a claim without a seven-year holding period once all the other conditions for claiming the relief are met,” the minister stated.
He also said that it is proposed “to introduce a provision which will override the application of the seven year holding rule in the specific circumstance involving the death of a spouse”.
“Where an individual has jointly owned the farmland with his or her spouse or civil partner and that spouse or civil partner dies before the seven-year holding period has expired, and the individual who is the surviving spouse, as a consequence of the death, has to lease the farmland, he or she will not be subject to the seven-year holding rule,” Minister McGrath outlined in the Dáil.
According to Deputy Doherty the new seven-year restriction is welcome because it will end a practice which “had an impact on farmers in pushing up land prices for genuine active farmers”.
IFA
Meanwhile the Irish Farmers’ Association (IFA) also said that the amendment to the Finance Bill to “exempt gifts and inheritances is vitally important to ensure land mobility is not impacted as a result of these changes”.
IFA Farm Business chair, Rose Mary McDonagh, said: “There was a real concern among farmers that land transferred via gift or inheritance would be impacted by the changes to the tax treatment of land lease income that were announced in Budget 24.
“The recent amendments now ensure that this will not be the case, which is a positive outcome.”