Farm Ireland

Thursday 19 July 2018

More farms may be spared stamp duty hike after backlash

Agriculture Minister Michael Creed. Photo: Colin O'Riordan
Agriculture Minister Michael Creed. Photo: Colin O'Riordan

Kevin Doyle and Margaret Donnelly

The scope of exemptions available for farmers to avoid the new 6pc stamp duty on land sales could be widened to ease the backlash to the Budget measure, the Irish Independent has learned.

However, the vast majority of buyers of land sold on the open market will now be facing a stamp duty bill of 6pc, up from 2pc before the Budget.

Officials in the departments of Agriculture and Finance are considering changes to the rules which allow inter-family sales to avoid the tax if the seller is 67 years old or younger.

It is understood the age could be raised - but at the same time Finance Minister Paschal Donohoe has confirmed that he was fully aware when writing the Budget of the affect of the tax change on farmers.

Agriculture Minister Michael Creed was caught off guard, and initially claimed the 6pc rate of commercial stamp duty "does not apply to agricultural land".

However, he has now been definitively contradicted by Mr Donohoe, who told the Irish Independent there should never have been any confusion about the issue. "I was very much aware of the definition of non-residential commercial property and everything that is included in it," he said.

Mr Donohoe said he purposely referenced the young trained farmers' relief scheme which exempts purchasers under 35 from normal stamp duty and the consanguinity rate of 1pc.

"I am, of course, aware of the concerns of people who represent farmers. What I have to do is point to the broader context of where we are.

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"Stamp duty in relation to commercial property is 2pc. If you compared it to the UK it's 5pc, we used to be at 9pc."

In a clear signal that he will not backtrack on the measure, Mr Donohoe added: "If I don't address things like that now, it will create further difficulty for me in the future."

Irish Farmers' Association president Joe Healy said at an IFA executive council meeting yesterday that the old stamp duty of 2pc should apply to land going to active farmers.

"The Finance Bill, which will be published next Thursday, must provide for land that is purchased or transferred and used for farming, to remain at the 2pc stamp duty rate.

"The qualifying criteria for this would be the same as Revenue currently applies to define an active farmer for other agricultural reliefs." Mr Healy said this proposal is credible, as it would limit the 2pc rate to transactions where the land will be farmed by active farmers.

There is still considerable confusion over whether deals already in process will be subject to the higher rate.

A spokesperson for Mr Creed said there will be "transitional arrangements in place for those with signed contracts".

In the Dáil, Fine Gael TD Tony McLoughlin said he was "concerned" about the stamp duty and believes "it must be changed in the Finance Bill".

Fianna Fáil's Declan Breathnach said: "While I recognise in particular that there are concessions for young farmers in the consanguinity rights on transactions, small to medium farmers buying lands to expand their farms should get a concession in any discussion post-Budget."

Irish Independent

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