Agricultural Relief

Can Agricultural Relief be withdrawn or clawed back?

Revenue will withdraw or clawback the relief in the following two circumstances:

Disposal

If any part of the property (other than crops, trees and underwood) is disposed of (including by compulsory acquisition):

• within six years of the valuation date of a gift or inheritance
• and
• you do not replace it with other agricultural property.

Note

For gifts and inheritances taken before 1 January 2024, the clawback period commences on the date of the gift or inheritance.

The time limit for reinvesting in replacement agricultural property is:

• within one year of the disposal
• or
• within six years of a disposal under a compulsory purchase order.

Revenue will not clawback the relief if you use the full proceeds of the disposal to replace the agricultural property. If only a portion of the proceeds are reinvested in agricultural property, Revenue will clawback a portion of the relief.

If CGT is paid on a disposal, only the net proceeds available after payment of the CGT need be reinvested.

If you dispose of agricultural property for less than full consideration, the proceeds will be deemed to be the market value of the agricultural property.

It is not necessary that the proceeds are reinvested in the same type of agricultural property. For example, the proceeds from the disposal of livestock could be reinvested in land or machinery without losing the relief.

Cease to be a farmer

In the case of gifts or inheritances taken on or after 1 January 2015, Revenue may withdraw the relief if you:

• no longer farm the property for at least 50% of your working hours (unless you hold agricultural qualifications)
• or
• do not farm the property on a commercial basis for at least six years from the valuation date.

If you lease the property to another person, that person must farm the property in accordance with the two conditions set out above for the same six year period. If the lessee no longer meets these conditions, the relief may be withdrawn.

Where Revenue claws back the relief, you need to file an additional CAT return and pay any outstanding tax due. 

Next: How do you claim Agricultural Relief?