6% duty on some farm sales

Some farm sales will be included in the non-residential property transfers for which stamp duty was trebled from 2% to 6% in the Budget, writes Stephen Cadogan.

The new 6% rate (which did not come as a complete surprise, a rise had been leaked days in advance of the budget) came into effect on Wednesday, with no “grandfathering” of legally binding contracts entered into prior to this date.

Moving the Dail motion for the vote which approved the 6% tax, Minister for Education and Skills Richard Bruton said: “The provisions are very clear. They provide a number of very substantial reliefs for farm land. They include the case of the young farmer, and the case of a person related by consanguinity. There is also a refund should the land be disposed of and used for housing.

“While some farmers will pay the 6% if they choose to extend their holdings by purchasing land in circumstances other than those I have outlined, on the other hand, substantial investment is being put in to strengthen the position of farming, particularly in light of the pressures which are coming from Brexit. It is worth recalling that back in 2008, stamp duty of 9% applied.”

An amendment proposed by Independent TD Michael Fitzmaurice, that sales of land for farming not be subject to the 6% stamp duty, was defeated.

The 6% stamp duty is subject to a 66% refund for property that is developed for residential use within 30 months (details will be in the Finance Bill). Also, consanguinity stamp duty relief at 1% for inter-family farm transfers to close relations, such as father-son or aunt-niece, is being maintained for a further three years, enabling many to avoid the 6% tax. Minister Donohoe also announced the young trained farmer stamp duty exemption is maintained.

According to the Government, excluding all sales of agricultural land from 6% stamp duty would require state aid approval from the EU.