Farm Ireland
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Sunday 21 October 2018

The new rules which could see some farmers avoid stamp duty hike

(Stock photo)
(Stock photo)
Ciaran Moran

Ciaran Moran

Recently agreed changes to the Finance Bill will allow farmers that both sell and purchase land for the purposes of consolidating an existing farm holding avoid the recent stamp duty hike.

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

Where other qualifying conditions are satisfied, stamp duty will be paid only 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.

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

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

When the stamp duty relief previously applied, a maximum period of 18 months was allowed between a purchase and a sale.

However, in this case the Government is set to increase this period to 24 months in line with the capital gains tax relief.

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Meanwhile, the rate of stamp duty that previously applied in relation to the relief was the standard rate. The standard rate is now 6pc but the Government have now decided to apply a lower rate of 1pc.

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 be subsequently recovered by Revenue, or partly recovered as appropriate.

The relief will apply in relation to instruments conveying or transferring land that are executed on or after 1 January 2018 and on or before 31 December 2020.

Because the Government will need to seek state aid approval for this relief from the EU Commission, the commencement of the new provisions subject to a Ministerial Order which will be made when such approval is obtained.


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