Stamp duty relief: Lie of land for young trained farmers
Budget 2013 saw an extension to the “Young Trained Farmers” stamp duty exemption, and thankfully, this continues until at least December 31, 2015.
This long-standing relief provides for a total exemption from stamp duty on either the transfer, or purchase, of land where all of the following criteria are satisfied:
The recipient has achieved the appropriate qualification
The recipient is under 35
The recipient spends not less than 50% of their time farming for the following six years, and
The individual retains ownership of the land for the entire six-year period.
In general, land transferred in joint names does not qualify for the young trained farmer relief, unless all persons are “young trained farmers”, and all meet the above criteria. There is, however, an exception, where land is transferred into the joint names of spouses or civil partners.
Where an individual satisfies all of the criteria except for the relevant qualifications, the individual can, if they achieve the relevant qualifications within a four-year period, seek a refund of stamp duty paid.
Stamp Duty leaflet SD2B outlines the relevant qualifications which are deemed necessary, however, where an individual obtains alternative qualifications, for example from another jurisdiction, it may be possible for the individual to still claim young trained farmer relief, if the applicant obtains approval from Teagasc, certifying that the qualifications obtained are equivalent to the Irish qualifications.
Meanwhile, the recent Finance Bill has also made some amendments in relation to stamp duty. More specifically, the amendments have been made in respect of the reduced rate of stamp duty which normally applies on the transfer of property to a blood relative.
This relief, commonly referred to as “Consanguinity Relief”, usually means that the transfer of land between related persons can qualify for a 50% reduction in stamp duty. Of course, where the recipient qualifies for the young trained farmer stamp duty relief, there is no liability to stamp duty.
This relief can be relevant where the individual receiving land cannot satisfy the criteria for young trained farmer relief, either because they are over 35 at the time of receiving land, or do not have the required qualifications, or cannot commit to spending more than 50% of their time farming for the six years post transfer.
This half rate of stamp duty applies up to 31/12/2014 on transfers of agricultural property to certain blood relatives, reducing the normal rate of stamp duty from 2% to 1%. This relief was actually scheduled to expire from December 31, 2014, however, the amendments in this year’s Finance Bill see an extension of the relief in limited circumstances.
After 1/1/2015 and before December 31, 2015, the half rate of stamp duty can apply where:
The farm is transferred to an individual who qualified as a trained farmer or will qualify within four years (but cannot avail of the young trained farmer exemption), and that individual farms the land for the following six years.
Or in the case of an untrained individual, the individual farms the land for the following six years, spending at least 50% of their time farming.
Or the land is leased to a person who either is a trained farmer, an individual who will become a trained farmer within four years, or an individual who spends more than 50% of their time farming. The lease must be for at least six years. In all these cases, the farm must be farmed on a commercial basis, with a view to the realisation of profits.
After December 31, 2015, the relief is extended further to January 1, 2018, but only in those cases where the individual transferring property is aged under 67.
The Finance Bill has no effect on the transfers to persons who can satisfy the criteria for young trained farmer relief, in cases where this is not possible, the extension of the half rate of stamp duty to land transfers after December 31, 2014 is welcome. It is important to ensure any proposed transaction meets relevant criteria.
