The sale or purchase of a farm is always a significant transaction.
The scale and complexity of farming operations today creates multiple issues, from GST to asset value allocations. Experience shows that sale and purchase agreements are often signed before seeking the right advice.
From the 1st July 2021 there are new rules that apply to the allocation of the total price across land, buildings, development expenditure and supplementary feed. Under the new rules both the vendor and purchaser need to treat the allocation of values the same.
The vendor has two months to set the price and advise the purchaser and Inland Revenue. If this notification is not made, then the buyer has two months to set these prices and advise the vendor and Inland Revenue.
The best approach is to have these values specified before signing the agreement as the allocation of values can have implications for Income Tax.
Make sure you speak to your accountant and other advisors before entering into any agreement to sell or purchase a property. There is generally only one opportunity to structure these transactions that benefits all parties.