Stamp duty hike: Farmers who have signed land contracts in limbo as Government mulls over transitional arrangements
Both the Departments of Agriculture and Finance are currently examining the traditional arrangements to be put in place for those who have recently signed contracts to purchase land.
Finance Minister Paschal Donohoe is standing over his decision to include farmland in his hike of stamp duty on property from 2pc to 6pc.
The measure in Budget 2018 caught Agriculture Minister Michael Creed off guard and has resulted in a backlash from farming bodies.
It is also understood both Departments are examining the upper age limit on of 67 on the consanguinity stamp duty in a effort to lessen the impact of the tax hike.
There was initial confusion within government as to whether this would directly impact the sale of farmland but Mr Donohoe has confirmed it will with the exception of inter-family sales and where the buyer is under 35 years of age.
As a result Kildare-based auctioneer Paddy Jordan told the Irish Independent the “vast majority” of farms sold will now be subject to the new higher rate of tax.
“We see some young farmers buying who will qualify for the 0pc relief and carry out valuations for inter-family transactions, but the vast majority of land sales are to people who do not qualify for such reliefs,” he said.
Mr Jordan sold a large farm for over €1.3m on Budget Day.
“The deal was signed before the Budget was passed and the buyer’s Stamp Duty will be over €20,000, but if the farmer had bought the land after the Budget, he would be facing a Stamp Duty bill in excess of €80,000,” Mr Jordan said.
IFA President Joe Healy said the Government must honour the commitment made by Minister for Agriculture Michael Creed that the increase in commercial stamp duty from 2% to 6%, announced in the Budget, would not apply to farmland.
“The Minister must sit down with the Minister for Finance Pascal Donohoe as a matter of urgency and clarify how this commitment will be implemented," he said.
Joe Healy acknowledged that the Stamp Duty reliefs for young trained farmers and for related parties would take an amount of transactions out of the 6% rate. However, there would still be a substantial amount of land sales and transfers which are not covered by these reliefs. Minister Creed and Minister Donohoe must make urgent provisions to ensure these transactions undertaken by farmers remain at the old 2% rate,” he said.
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