The 80% farmer test, explained
To get agricultural relief, at least 80% of everything you own must be farm property once you've inherited. It's a snapshot on one day, it uses gross values, and it catches more families out than any other rule.
In short
- Add up everything you'll own on the valuation date, including the inheritance.
- Farm property must be at least 80% of that total.
- Most debts aren't deducted. The exception is a mortgage used to buy, improve or repair your own home, where that home isn't farm property.
- Put another way, your non-farm assets can be at most a quarter of your farm assets.
What goes into the sum
Everything you're beneficially entitled to on the valuation date, at its full market value:
- the gift or inheritance itself, including any cash, shares or houses that come with the farm
- farm property you already own
- your own home (less the mortgage on it, if it's an off-farm home), other houses and sites
- savings, shares and investments
- cars and other valuable belongings
Revenue accepts that a future entitlement to a pension fund doesn't need to be included. See pensions and inheritance tax.
What doesn't reduce the total
Loans and overdrafts aren't deducted, even if they're secured on your home. A farm loan doesn't reduce the total, and a top-up on your mortgage that was spent on something other than the house doesn't either. Only the part of the mortgage used to buy, improve or repair an off-farm home comes off.
The valuation date
The test is taken on the valuation date, not the date of death. For a gift, that's usually the date of the gift. For an inheritance, it's usually the date the grant of probate issues, which can be many months after the death. What you own on that day is what counts.
A worked example
Aoife inherits a farm worth €1,200,000 from her mother. She owns a house worth €400,000 with a €150,000 mortgage, and has €80,000 in savings.
| Farm property | €1,200,000 |
|---|---|
| Her home, less mortgage | €250,000 |
| Savings | €80,000 |
| Total | €1,530,000 |
| Farm share | 78.4%. Fails by a small margin. |
| Tax as it stands | (€1,200,000 − €420,000) × 33% = €257,400 |
If, before the valuation date, Aoife put €30,000 of her savings into farm machinery or stock that the farm genuinely needs, her farm property would be €1,230,000 of the same €1,530,000 total. That's 80.4%, which passes. With the relief, the farm she inherits is taxed on 10% of its €1,200,000 value, which is €120,000. The machinery she bought is her own, not part of the inheritance, so it helps her pass the test but isn’t taxed. €120,000 is under her €420,000 threshold, so no tax would be due.
Mistakes that cost families the relief
- Cash or a house left alongside the farm. A will that leaves you the farm and the owner's savings or a rental house can push you under 80%. Leaving non-farm assets to someone else can keep you over it.
- Selling a site before the valuation date. The land was farm property. The money from the sale isn't.
- Forgetting your own assets. A house, an investment property or a large pension lump sum already paid out all count.
- Assuming the date of death applies. Things can change between the death and the grant of probate.
Any change made to pass the test should be a genuine one. Talk to your solicitor or accountant before you move money.
Common questions
Is the 80% farmer test measured on the date of death?
No. It's measured on the valuation date, which for an inheritance is usually the date the grant of probate issues.
Does my own house count in the 80% farmer test?
Yes. An off-farm home counts at its value less any mortgage you took out to buy, improve or repair it. Other houses and sites count in full.
Do debts reduce the total in the 80% test?
Mostly not. The test uses gross values. The main exception is the mortgage on an off-farm home.
Enter your own assets and the calculator runs the 80% test for you, and shows how far over or under the line you are.