Example

A farm of 100 acres is zoned as “agricultural land”. Its value as farmland is €2 million. Therefore, its current use value is €2 million. If, however, it is likely that the land could be zoned for development, and its value on that basis is €20 million, then it is development land for the purposes of the definition although it may not have been rezoned at the date of the gift or inheritance.

“current use value”, in relation to land, is the amount which would be the value of the land on the date of the gift or inheritance if its value were calculated on the basis that it was, and would remain, unlawful to carry out any development other than development of a minor nature.

“development of a minor nature” means development which is exempted development under section 4 of the Planning and Development Act 2000, e.g. development consisting of the use of any land for the purpose of agriculture and development consisting of the use for that purpose of any building occupied together with land so used.

The expressions “agricultural property”, “relevant business property” and “valuation date” shall be construed in accordance with sections 89, 93 and 30 respectively.

(2) Where—

• relief has been granted by virtue of section 89(2) or 92 in respect of a gift or inheritance of agricultural property or relevant business property, as the case may be,
• the property is comprised, in whole or in part of development land, and
• that land is disposed of in the period commencing 6 years after the date of the gift or inheritance and ending 10 years after that date,

the relief granted will be clawed back in respect of the development value of the land.

The expression “disposed of” has its ordinary meaning (i.e. a transfer of ownership in an asset) and includes a sale, a compulsory acquisition, a gift or a transfer of property occurring on the death of the donee or successor.

Example

A receives a gift of development land from his father on 1 June 2006. The land qualified for agricultural relief. The current use value of the land on the valuation date (i.e. 1 June 2006) is €2 million. The market value of the land on that date is €20 million because of its development potential. A sells the land in 2013. A clawback will apply in respect of the relief granted on the sum of €18 million (i.e. €20 million less €2 million), being the value attributable to its development potential.

In the case of inheritances, the valuation date will, in the majority of cases, be after the date of death of the disponer. The clawback will, therefore, be based on the market value of the land on that date.