Do your homework when selling land

By Heather Bright, Partner and ARA specialist

Increasing land prices will make it more tempting than ever to sell land. But it’s important to make sure that would-be sellers are aware of all the implications that come with a sale. Getting everything in place before putting your land up for sale will make the process simpler and more hassle free.

As a first step make sure the following are fully accessible: all paperwork related to the land such as title deeds/registration details along with information on entitlements and stewardship agreements. Also include any planning permissions and rights of access. This also means it’s good to make sure any disputes are also resolved before putting land up for sale. On a practical note, ensure that things like oil and diesel tanks are legally compliant. When it comes to water supply, such as a spring or borehole, make sure you can give information on quality and continuing security of supply to possible purchasers. Likewise, domestic water supplies should be free from contamination.

Finally, make sure you have representation in the form of a reliable and knowledgeable solicitor who deals with agricultural land sales and purchases.

Inheritance Tax

It’s also important to consider the sale and purchase of land within your estate planning. You can pass on some agricultural property free of Inheritance tax, either during your lifetime or as part of your will. Agricultural property that qualifies for Agricultural Relief is land or pasture that is used to grow crops or to rear animals intensively.

Agricultural Relief is due at 100 per cent if:

the person who owned the land farmed it themselves

the land was used by someone else on a short-term grazing licence

it was let on a tenancy that began on or after 1 September 1995

There are further rules that sees land liable for 50 per cent and other rules around inheritance. It is important to seek professional advice when considering these issues.

Capital Gains Tax

Agricultural land qualifies for the non-residential rate of CGT, i.e., 10% or 20% depending on the owner’s level of income. If sold as a business, the taxpayer may be able to qualify for Business Asset Disposal Relief (described above) in order to pay a tax rate of 10%. Note that if the land includes a farmhouse, cottage, or other residential property, part of the gain may be taxed at the residential rate (i.e.,18% or 28%).

Making plans to sell your land? Give us a call today.