Print this page

Site sales to be hit by 80pc NAMA tax

Farmers will be hit by the 80pc 'windfall tax' on the sale of all re-zoned land as a result of NAMA.

In a body blow for farmers, all agricultural land re-zoned for development, residential sites and road building has been included in the proposal for the new high rate of capital gains tax.

The fall-out from NAMA is also likely to result in excessive security requirements from banks for farm loans, legal experts have warned.

Taxation expert Declan McEvoy, from IFAC Accountants, claimed the 80pc capital gains tax on windfall gains would have a horrendous impact on farmers.

Mr McEvoy warned that site sales and the CPO sales of land for roads would be subject to the 80pc rate.

"No-one is exempt from the tax and all re-zonings are included," he insisted.

Unless an exemption is secured in the coming weeks, the NAMA legislation would severely restrict the ability of farmers to realise the development value of their properties, Mr McEvoy feared.

"If a farmer who owns 20ac of land with an agricultural value of €200,000 has his land re-zoned, that 20ac is suddenly worth €1m," he said.

"The windfall gain on that would be €800,000 and the farmer would face 80pc capital gains tax on the sale, costing him €640,000."

Similarly, the sale of a 0.5ac residential site worth €100,000 would be subject to a windfall tax bill of around €76,000.

Meanwhile, banks are also likely to increase the level of security required for farm loans should NAMA get the green light, a leading commercial law expert has claimed.

"The banks will look for the biggest amount of security they can on loans," said Malcomson Law's Cathy Power. "The farm organisations need to approach the Irish Banking Federation to draw up guidelines on security for farm loans immediately, instead of waiting until farmers' backs are against the wall."

In what she described as a 'doomsday scenario', Ms Power said farmers could face losing their family home or farm buildings if they failed to keep up loan repayments.

"There will be no bad bank, NAMA or bail out for farmers," she warned. "And farmers need to make sure they don't give the family home, farm buildings or best agricultural land as security for loans."

In light of the abolition of land certificates in December this year, Ms Power advised farmers to consider dividing their farm folios.

"Divide the farm into different folios, such as the family home, the farmyard, the land close to the house, land with future development potential, good agricultural land and poor agricultural land," she advised.

"When the bank looks for security, do not give them anything you could not do without."

She added that farmers should also consider re-negotiating security agreements on existing loans.

- Caitriona Murphy

This news section contains stories of interest from publicly available news sources. Where we are representing the clients referred to in the news material we will say so. Where we do not represent individuals or bodies mentioned or quoted, the inclusion of the news story in our news section is not intended nor should it be taken to imply that we act for the individual or body concerned.