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How to minimise tax on land disposals

How to minimise tax on land disposals
How to minimise tax on land disposals

I was reading an article recently on a couple that had a tax judgement in their favour, the long and short
of it was they sold some land and claimed retirement relief on it, revenue contested their claim but lost
in arbitration. It made me think that this couple either planned their exit from this land very carefully or
they were just lucky. In most cases you need to plan your asset disposals carefully and below is a
sample of what you need to be aware of.

There are two different reliefs that could save you hundreds of thousands of euro in Capital Gains Tax
(CGT) but you will need professional advice, this article is only an outline of things for you
to think about.

Entrepreneur relief this is available to landowners who dispose
of land that they have owned and farmed for at least three of the five years prior to selling.

A 10% CGT rate will apply to the first €1million of any gain arising from the sale, above this threshold it
will be subject to the standard 33% rate. Companies do not benefit from this relief.

Retirement relief this is available to persons over 55 years
of age in respect of land that they have farmed for a continuous 10 year period.

Where the land has been rented out since December 2016, these lands must have been leased for
continuous terms of 5 years. Also, it cannot have been leased for more than 25 years unless the
landowner was a participant in the early retirement scheme.

The benefits to the qualifying persons is over 55 but under 66 are, the first €750,000 is sale proceeds is
tax exempt and for persons over 66 the first €500,000 in proceeds is exempt from tax. The couple I
referred to above, owned and farmed the land jointly so both availed of the €500k threshold. Very good

Unfortunately, any proceeds in excess of these limits are taxed at 50% unless it is more advantageous to
tax all of the proceeds at 33%. Also worth remembering is that all sale disposals are cumulative so limits
need to be watched where thresholds were not exceeded in the first disposal.

To summarise: before contemplating a sale of land or directing in your will that land should be sold
after your death make sure that you have your circumstances well appraised before you make any

There are numerous legitimate ways of minimising tax and advance planning is generally key.
Remember the adage: Death and Taxes we can’t avoid one of these, we may be able to avoid the other!

The information in this article is only to be used as a guide. Mannix Property Services advises all parties
to seek professional advice from your accountant, solicitor or tax advisor before embarking on any sale,
it is too big a decision to leave to chance.

Thinking of selling your property in Kerry and

We at Mannix Property Services sell property in all of Kerry and beyond.
Please register your details here and our Client Services department will be in touch to
see how Mannix Property Services can help. Alternatively, call Brendan on 086 050

Check out our blogs section for sellers tips, buyers tips, market updates and advice on
how to prepare your property for sale to ensure it achieves a top price.

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