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Tuesday 21 August 2018

Planned relief from stamp duty hike to consolidate farm holdings yet to commence

Finance Minister Paschal Donohoe (Niall Carson)
Finance Minister Paschal Donohoe (Niall Carson)
Ciaran Moran

Ciaran Moran

A new measure introduced to allow a farmer to claim relief from stamp duty where he or she sells and purchases land for the purposes of consolidating an existing farm holding is still waiting commitment.

Minister for Finance Paschal Donohoe said this week that the measure is subject to a commencement order after a full consideration of any administrative or EU state-aid requirements.

However he noted that the measure will apply to all transactions which took place after January 1, 2018, so farmers who consolidate their holdings prior to the commencement of the relief will still be eligible.

Minister Donohoe said his Department is continuing to explore the potential State Aid aspects of the measure and said this “may take a little time”.

How the measure will work

For the relief to operate, there must be both a sale and a purchase of land within a period of 24 months of each other.

Where other qualifying conditions are satisfied, stamp duty will only be paid to the extent that the value of the land that is purchased exceeds the value of the land that is sold.

A reduced rate of 1pc will be charged on the excess, if any, of the purchase value.

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If the sale takes place before the purchase, then relief will be given at the time of purchase.

However, if the purchase takes place first, then stamp duty will have to be paid but can subsequently be refunded when the sale takes place.

Conditions

A number of qualifying conditions must be satisfied before the relief can apply.

The most important condition is that Teagasc must issue a certificate stating that a sale and purchase or an exchange of farmland was made for farm consolidation purposes.

This is the certificate that is currently required in relation to the capital gains tax relief.

The criteria to be used by Teagasc for this purpose and the information to be supplied to Teagasc are contained in guidelines published by the Minister for Agriculture, Food and the Marine.

A purchaser of farmland must retain ownership of the farmland for a period of five years and must use the land for farming.

Where any part of the land is disposed of before the end of this five-year holding period, the stamp duty relieved can subsequently be recovered by Revenue, or partly recovered as appropriate.


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