Farm Ireland
Independent.ie

Saturday 16 December 2017

Budget 2018: Has it just got a lot more expensive to buy land?

Margaret Donnelly and Ciaran Moran

The Minister for Finance Paschal Donohue's announcement in today's Budget that Stamp Duty on commercial property transactions will increase from 2pc to 6pc.

And unbeknown to many, 'commercial' property includes farmland. However, the Minister for Agriculture Michael Creed told journalists today in his post-Budget press briefing that agricultural land would not be included in the new measure. 

However, Minister Donohoe never mentioned any exemptions to the Stamp Duty increase for farmland, making it look likely that farmland will continue to be classed as 'commercial' when it comes to Stamp Duty calculations.

Stamp Duty on non-residential property was lowered to 2pc in 2011 to get the commercial property market moving again.

In the Dail today, Donohoe said that it worked and now that the market is performing strongly, the time is right to focus resources elsewhere.

The Minister said the new rate which comes into force at midnight is still below the maximum rate of 9pc charged between 2002 and 2008.

And if that is true, from midnight tonight the price of land will be a lot more expensive.

According to tax expert Declan McEvoy, IFAC Accountants, the impact on farmers is that those who purchase land will now liable to the higher rate of Stamp Duty.

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On 100 acres land worth €1m, he says the purchaser will now be liable to pay Stamp Duty of 6pc – leaving them facing a Stamp Duty bill of €60,000 - instead of a previous bill of €20,000.

He also said an immediate unknown is whether transactions that have not yet closed before midnight tonight will be subject to the new rules, as this will mean an increased cost of €40,000 – the increase from 2pc to 6pc.

He says the Stamp Duty increase would encourage more inter family land transfers with the young trained farmer relief critical – as young trained farmers will not be subject to the 6pc as long as they are under 35 years of age and meet the criteria set out.

But if the new measure does apply to farmland, it is certain to make outside farmer buyers think twice before buying land.

IFA President Joe Healy said that any increase in commercial Stamp Duty, from 2pc to 6pc, will increase the cost of land purchase if it is included.

Now, it remains to be seen if any exemption can be put in place to exclude farmland and keep the Stamp Duty rate at 2pc for farmers.

Online Editors