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Capital Gains Tax (CGT) reliefs

  1. Overview
  2. Indexation Relief
  3. Farm Restructuring Relief
  4. Revised Entrepreneur Relief
  5. Principal Private Residence (PPR) Relief
  6. Property acquired between 7 December 2011 and 31 December 2014
  7. Disposal of a business or farm (Retirement Relief)
  8. Transfer of a site from a parent to a child

Farm Restructuring Relief

You may claim relief from CGT if you dispose of farmland for farm restructuring purposes.

The purpose of farm restructuring is to make your farm more efficient (improve the operation and viability of the farm). You can do this by selling and purchasing or exchanging farmland to bring the land closer together.

The relief provides:

  • full relief from CGT when the purchase price exceeds the sales price
  • or
  • partial relief on CGT when the purchase price is lower than the sale price. (Relief is given in proportion to the amount of the sale proceeds reinvested in purchasing new farmland.)

You might also qualify for relief on stamp duty on the purchase of the new land.

How do you qualify for the relief?

The first sale or purchase must occur between 1 January 2013 and 31 December 2025. The next sale or purchase must occur within 24 months of the first.

You may also be able to claim relief where you exchanged land with another person.

Note

The sale and purchase or exchange must result in a reduction in the distance between the land.

To qualify for the relief, you must have a Farm Restructuring Certificate issued by Teagasc. This certificate confirms that you carried out the transaction for farm restructuring purposes.

Relief is given at the time of the:

  • sale of the land, if the purchase takes place before the sale
  • or
  • exchange, where land is exchanged simultaneously.

How to claim the relief

You must complete a Farm Restructuring Relief Claim Form. Include the relief when you calculate your CGT and file your return.

CGT refund

You may sell farmland and pay CGT before you purchase new farmland. You can claim a refund when the purchase of the new land takes place.

Clawback

You may dispose of land that you purchased or exchanged within five years of the date of purchase or exchange. If you do, there will be a clawback of the Farm Restructuring Relief.

This does not apply where you dispose of the land under a compulsory purchase order.

  • Example 1

    In March 2023 Robert sells part of his farm which is eight kilometres away for €195,000. He had bought this land in 2008 for €182,000, and a disposal cost of €3,000.

    Robert purchases another farm, next to his farm, for €201,000 in November 2023. He qualifies for Farm Restructuring Relief and obtains a farm restructuring certificate from Teagasc.

    The purchase price exceeds the sale price, Robert qualifies for a full relief. He does not have to pay CGT on the sale.

    When he files his CGT return by 31 October 2024, Robert will include details of the sale and the relief.

  • Example 2

    Ryan sold land in April 2023, which is five kilometres away for €255,000. There was a disposal cost of €6,000.

    He had bought this land in March 1982 for €32,000 (including expenses). Ryan can apply Indexation Relief to the acquisition cost.

    Calculation of Ryan's CGT
    DescriptionCalculationValue

    Sale price

     

    €255,000

    Deduct allowable expenses:

     

     

    Purchase price

    (adjusted by 1982/83 multiplier)

    €32,000 x 2.678

    €85,696

    Disposal cost

     

    €6,000

    Chargeable gain

     

    €163,304

    Deduct personal allowance

     

    €1,270

    Taxable gain

     

    €162,034

    CGT due (33% of €162,034)

    €162,034 x 33%

    €53,471.22

    Ryan pays his CGT before 15 December 2023.

    Ryan then bought land nearer his farm for €204,000. He qualifies for Farm Restructuring Relief and obtains a farm restructuring certificate from Teagasc.

    The purchase price is less than the sale price. Ryan qualifies for partial relief. 

    Proportion of the sale proceeds reinvested
    DescriptionCalculationValue
    Purchase amount   €204,000
    Divided by sale proceeds   €255,000
    Proportion €204,000/€255,000 0.8 (80%)

    Because Ryan reinvested 80% of the sale proceeds in purchasing the other farmland, he qualifies for an 80% relief.

    Ryan will receive a refund of €42,777 (80% of the €53,471.22 he paid).

Next: Revised Entrepreneur Relief

Published: 23 February 2024 Print this page

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