I am informed by the Revenue Commissioners that, under the provisions of Section 89 of the Capital Acquisitions Tax Consolidation Act 2003, where agricultural property comprised in an inheritance is disposed of within six years after the date of the inheritance, a claw-back of agricultural relief will only occur where the proceeds from the disposal are not fully expended in acquiring other agricultural property within a year of the disposal. The extent of the claw-back relates to the amount of the proceeds not being so re-invested.
However, in the case where a person receives an inheritance of agricultural land and has claimed agricultural relief on the inherited land but then subsequently makes a voluntary gift of that land to a niece or nephew, a claw-back of the agricultural relief granted to the person when he or she inherited the land will not occur. This is because, in this situation, no proceeds have been received for the disposal of the land and a claw-back of the agricultural relief granted can only occur where actual proceeds are received for the disposal and then not appropriately re-invested.
For Capital Acquisitions Tax purposes therefore, a voluntary disposition without the receipt of proceeds does not result in a claw-back of agricultural relief. However, the Deputy may wish to note that depending on the circumstances a Capital Acquisitions Tax (gift tax) liability may arise for the niece or nephew. If the Deputy has a specific case in mind he may wish to contact the Revenue Commissioners with further details.