We often read that you need to prepare your sale plans at least 5 years before the planned date. The process of transferring a farm is a complex one for a transferor and requires real preparation. While certain actions need to be carried out in the 5 years prior to the sale, in reality it is necessary to integrate consideration of the transfer of the farm into each important stage in the farm's life.
Here's a detailed look at what you need to prepare for a successful transfer. There are a number of different factors to consider when preparing for the sale, including legal, financial and even landscape issues.
The question of setting the sale price of your farm is the subject of several articles on valuation.
A few years before you stop farming, you need to ask yourself a number of questions:
If you are also selling your home or selling your farm, you will need to plan for the purchase or rental of a new home. What will your budget be for this new project?
These are very important questions to think about, as they will help you decide whether to sell or rent the farmland you own.
To answer these questions, you will first need to take stock from a social and tax perspective.
An overall asset assessment with a view to retirement can help you see things clearly.
Transferring your farm allows you to recover capital from the sale of your assets (land, buildings, equipment, etc.). This capital will be used to repay any loans and debts. The remainder can be invested to generate additional income, or used to buy a new home, etc.
The decision to rent or sell your farmland, buildings, etc. will have an impact on your future income or on the capital to be reinvested.
Retirement is the main reason why a farm is put up for sale.
So it's important to be aware of your pension rights:
Not having enough quarters can have a major impact on the amount of your future pension. You therefore need to take stock of your pension entitlement and the date on which you can stop working.
If you stop working before you are entitled to a pension, you will have to take up another professional activity or rely on other sources of income.
Note that you can opt for Voluntary Old-Age Insurance within 6 months of ceasing your activity to continue to validate quarters of activity.
You can request a retirement information interview with your MSA. If you have a career with periods of activity in different schemes, you can log on to the info-retirement portal, which allows you to reconstruct your entire career and run simulations.
The sale of your property will generally mean that you cease trading, with tax consequences that can be significant.
We have devoted a special article to this subject, the taxation of the sale of a farm, which we invite you to consult.
Key points to remember: It is important to discuss the tax consequences of going out of business with your accountant, and to look at ways of reducing the tax impact if it is too great.
This is an extremely important point, which covers a wide range of dimensions, some examples of which are given below.
It is not uncommon in agriculture to find buildings built in whole or in part on the land of a third party: a farmer builds a building on the land of his owner, a farmer builds on the land of his spouse, a company builds on the land of one of the partners, etc.
It is not possible to sell a building without selling the land (except in the rare event of a land division). At best, you can claim compensation from the landowner.
To sell your building, you must first acquire the land. This may take some time with the owner, so it is essential to plan ahead as much as possible.
The presence of undivided ownership at the time of a sale can be a source of difficulties, given the number of people involved. It can also be difficult to reach agreement on a sale or lease, or to set a sale price.
Many joint owners are elderly, under guardianship or trusteeship, living abroad, in conflict with other joint owners, etc. These are all special situations that can delay or even block a transfer.
It may therefore be useful to put an end to these situations before you plan to sell. This is a point that should be anticipated many years before you cease trading.
It is also essential to take stock of the land you are leasing.
Have all the owners agreed to sign a lease with your buyer? If not, you may be able to buy the land yourself with a view to a future resale or lease.
If these owners wish to sell the land, this will increase the overall price of the farm and may therefore have an impact on the financial feasibility of a buyer.
Some owners may also prefer to pass the land on to someone else: a neighbour, another tenant or a family member. This means that your future buyer will not be able to use part of the land.
What impact will the loss of this land have on the value of your property? Will it have a decisive impact on the operation of your farm and the maintenance of production volumes?
These specific situations are also crucial to the success of your transfer project.
The proximity of neighbours can be a major obstacle to a sale.
In the case of livestock farms, under the regulations governing classified facilities, it is very difficult to obtain authorisation for major works if a neighbour is less than 100 metres away. What's more, the operation of a farm can cause nuisance to neighbours: noise, odours, etc.
If possible, you should therefore build your buildings at a sufficient distance from your neighbours to avoid any disputes. And why not buy if your neighbour sells his house.
This is something you need to take into account throughout the life of your farm, not just a few years before it is sold.
As with the sale of a house, the first impression left on a prospective buyer is crucial to the success of your sales project.
Although there are currently no companies specialising in ‘farm-staging’ in the same way as ‘home-staging’, the idea is the same: to enable a prospective buyer to see your farm from a different angle.
Don't hesitate to visit the farm in its entirety, putting yourself in the shoes of a buyer:
By carrying out this self-diagnosis of your farm's strengths and weaknesses, you'll be able to identify more easily the various areas for improvement.
Here is a checklist of things you can do to impress a prospective buyer of your farm:
The preparatory work is important before selling your farm. It can have a real impact on the final sale price. Some things need to be done a long time before you plan to stop trading.
So it's a crucial step if you want to make a success of your transfer and give yourself peace of mind.
Here are some additional resources we have put at your disposal to provide you with all the information you need for your transfer project.
