A major revamp of the tax reliefs relating to land letting and land inheritance is being demanded by the farm organisations to halt the hoovering up of farmland by the country’s super-rich.

A spate of high-profile land purchases over the last two years by the Magnier family and companies associated with Coolmore Stud, in addition to the recent acquisition of two tillage holdings in the midlands by aviation magnate Michael O’Leary, have brought the issue into sharp focus for farmers.

Figures compiled by the Irish Farmers Journal earlier this year showed that the Magnier family and Coolmore Stud owned in excess of 10,000ac in Co Tipperary alone.

And the bloodstock enterprise remains the leading buyer of land in the southeast, having bought an estimated 1,500ac in Tipperary and Kilkenny since 2023.

These purchases include landmark properties such as the 530ac Kilree Estate in Kilkenny and the 527ac Killough Castle near Thurles which is now the proposed site for a major solar farm.

Ryanair’s Michael O’Leary has not been on the same flight path as Magnier in terms of land purchases, but he recently paid €3.95m for two tillage farms comprising 253ac in Westmeath.

The scale of the land purchases by these multi-millionaires and billionaires has unsettled farmers, and prompted concern and anger.

This was evident from the IFA presidential hustings in the Horse and Jockey this time last year when Coolmore’s appetite for land came in for a lot of adverse commentary from the floor.

Farmers complained of being effectively blocked from expanding because they could not compete for ground with the bloodstock enterprise.

But why are the super-rich building vast portfolios of farmland and what can be done to stop them?

The long-term stability of land as an investment asset and the tax efficient manner in which it can be used to transfer wealth are the two primary reasons for the purchases, tax advisers maintain.

Land invariably holds its value over time and is therefore viewed as a safe haven for wealth.

The other big attraction is in the transfer of wealth from one generation to the next.

The agricultural reliefs available under capital and inheritance taxes to those who transfer wealth as farmland mean that the various inheritance taxes levied on such transfers can be reduced by as much as 90%.

For example, the transfer of €20m to a son or daughter in shares and cash could attract a tax liability of close to €6m.

In contrast, the transfer of €20m as agricultural land could potentially slash the tax bill to as little as €600,000-700,000, explained tax specialist Declan McEvoy.

The application of agricultural reliefs is therefore hugely beneficial for the super rich and saves them countless millions in terms of inheritance taxes.

The introduction in the recent budget of an active-farmer qualification clause for agricultural relief will be viewed as a win for the farm organisations, but it will not stop the purchase of agricultural land by wealthy individuals who farm the land they buy.

So, what else can be done by Government?

“Measures included in Budget 2025, such as increasing the Group A threshold for Capital Acquisitions Tax from €335,000 to €400,000, along with the requirement that the person transferring the land must have farmed it for at least six years, are steps in the right direction,” said the Irish Cattle and Sheep Farmers’ Association (ICSA), president Seán McNamara.

“But more needs to be done in the form of policies that prioritise access to land for genuine farmers who derive their livelihood from agriculture,” he maintained.

McNamara claimed the misuse of agricultural reliefs was “distorting the land market”.

Investors should also be excluded from receiving tax breaks for the long-term leasing of farmland, since this practice was artificially inflating land prices, he insisted.

Tax system

Irish Creamery Milk Suppliers Association (ICMSA), president Denis Drennan accepted that further amendments to the tax system may be required to ensure that “farm families are fully supported” in the generational transfer of farms and “that such supports are reserved for the active farmers for whom they were originally designed."

“Measures designed to facilitate the transfer of working farms to the next generation are now being openly used by often hugely wealthy non-farmers to avoid inheritance and ‘gains’ taxation measures that they would otherwise be liable to,” said Drennan.

“That has to be stopped and ICMSA favours amending the taxation system to do just that,” he added.

Negotiations on active farmer test continuing

Negotiations around the active farmer test to qualify for Agricultural Relief are continuing with the Department of Finance but issues that have arisen will be ironed out, insisted IFA’s Bill O’Keeffe.

“The challenge here is to tighten the rules around the definition of an active farmer to make it more difficult for investors to avail of the relief while at the same time safeguarding and encouraging generational renewal for genuine farm families,” he said.

The relief grants a deduction of 90% from the market value of farmland when calculating inheritance taxes.

“We have been assured by the Department of Finance that they will continue to work with us to find solutions where any problems arise,” added O’Keeffe, who is the IFA’s farm business chair.

A series of meetings between the IFA and Department officials have already dealt with a number of areas of concern, he said. The introduction of the six-year requirement was welcomed by ICMSA, but the farm body called for the position in relation to farm companies and farm partnerships to be clarified as a matter of urgency.

Family farm

“The whole point of the relief is to facilitate the transfer of the family farm from one generation to the next and ensuring the ‘successor’ generation has the option to continue to farm the land rather than being forced to sell it to meet a tax liability,” said ICMSA farm business chair Pat O’Brien.

“The important thing to note now is that farmers who have leased their land to their companies or are in a farm partnership must be afforded the same protection when transferring the asset. That is still unclear and ICMSA is calling on the Minister for Finance to clarify the position on this matter,” said O’Brien.

Land tax an option to spancil ranchers

The introduction of a land tax, a hike in the stamp duty rate for serial land purchasers or the adoption of a ceiling for agricultural relief are among the taxation measures that could be adopted by Government to curtail land purchases by the super wealthy.

In terms of stamp duty, the Government could increase the level from the current 7.5% and apply a “tiered accumulated rate” based on the total value of the land purchased, explained tax consultant Declan McEvoy.

The provision in the budget where stamp duty increased to 15% for multiple purchases of apartments was cited by McEvoy as a model for how this could be potentially applied.

Another option is to introduce a sliding scale for Agricultural Relief, McEvoy maintained.

“For example, the 90% relief could be reduced by 10% for every €1m inherited above €5m,” he explained.

The application of a wealth tax on land, along the lines of the zoned land tax, might also be considered, McEvoy suggested.

However there is a definite reticence among the farm organisations with regard to a land tax.

“We had that before and we don’t want to go back there,” one farmer representative commented.

“The threshold for it could initially be set at 1,000ac or 2,000ac, but who is to say it won’t be at 500ac in 10 years’ time if things go wrong?” he said.

Options

The Irish Natura and Hill Farmers Association (INHFA) also urged caution.

“We do need to look at options to limit those who are buying too much [land], while at the same time supporting young farmers. On this basis taxation may be an option, but we have to be careful that there are not unintended consequences,” said INHFA leader Vincent Roddy.

“Obviously any taxation option would need to be carefully assessed,” he maintained.

ICSA leader Seán McNamara is adamant any taxation measures introduced “must protect the interests of those who are genuinely farming the land and align with broader objectives of ensuring the long-term viability of family farms and supporting rural communities."

ICMSA leader Denis Drennan said the tax changes should focus on amending the Capital Acquisition Tax (CAT) and Capital Gains Tax (CGT) in order to “actively discourage the trend of land ‘banking’ by wealthy investors."

“The taxation system, particularly for CGT and CAT, needs to be reviewed and eligibility for the various reliefs must be reserved for active farmers. It’s also very clear that limits should be in place for people and investor entities who are purchasing vast tracts of land,” he said.

For hill farmers, the National Parks and Wildlife Service (NPWS) and Coillte are a bigger threat in the land market than the super-rich, according to Vincent Roddy of the Irish Natura and Hill Farmers Association (INHFA).

“In assessing who is buying land we also need to recognise the influence of State or semi-State actors,” Roddy said. “Coillte and the NPWS are the two largest landowners in Ireland and unfortunately they continue to buy land, to the detriment, in my opinion, of local communities and especially young farmers who are priced out of the market by these players,” he explained.

This week, the State snapped up 165ac in Kilkenny and plans to turn it into a nature reserve. And, there have been a number of headline purchases by the NPWS over the last 18 months, including a 1,500ac hill farm at Aughavanna, Co Wicklow, as well as 1,400ac along the Conor Pass in Kerry’s Dingle Peninsula.

The agency also bought the 550ac Dowth Hall farm in Meath from Devenish Nutrition. In addition, the State body purchased smaller parcels adjoining existing NPWS lands.