Farm Business

Consolidation Stamp Duty Relief Secured by IFA to Commence

IFA Farm Business Chairman Martin Stapleton has welcomed the announcement by Minister for Agriculture, Michael Creed and Minister for Finance Paschal Donohoe that the stamp duty relief measure for farm consolidation, secured by IFA following Budget 2018 will commence from August 1st 2018.

This consolidation relief was among the measures sought by IFA to minimise the impact on farmers of the Budget 2018 increase in commercial stamp duty to 6%.

The new Stamp Duty Relief for farm consolidation allows for a 1% rate of stamp duty where a land transaction qualifies for a “Farm Restructuring Certificate” for the purposes of Capital Gains Tax Relief on Farm Restructuring.

Martin Stapleton said the implementation of this measure will be a welcome relief for farmers who have been anxiously awaiting its commencement in order to complete important land transactions. He said it will increase opportunities for farmers to consolidate their holdings and is important in the context of the Government’s commitment to encourage and land mobility, farm restructuring and the promotion of on-farm investment.

The Farm Business Chairman said it is important to note that, while the relief cannot be applied for until after August 1st, it will apply in relation to all transactions that meet the criteria undertaken from January 1st 2018. This means that if the 6% stamp duty rate was paid on a transaction that meets the criteria and was undertaken after January 1st 2018, a reimbursement can be applied.

A separate stamp duty relief for long term leases will commence from July 1st. This measure was sought by IFA and included in Budget 2015 but was delayed due to finalising administrative arrangements for collecting EU State Aid data, which necessitated legislative change.


How farm consolidation relief will work

Stamp Duty Relief for farm consolidation allows for a 1% rate of stamp duty (as opposed to the general rate of 6%) where the land transactions qualify for a “Farm Restructuring Certificate” for the purposes of Capital Gains Tax Relief on Farm Restructuring.

It will apply in relation to instruments conveying or transferring agricultural land that are executed on or after 1 January 2018 and on or before 31 December 2020. Where there is a purchase and sale of land within 24 months of each other that satisfy the conditions of consolidation, then stamp duty will only be paid to the extent that the value of the land that is purchased exceeds the value of the land that is sold. In addition both the purchase and sale must occur between 1 January 2018 and 31 December 2020.

In such a situation stamp duty will only apply at the rate of 1% on the excess. The main conditions for the relief are:

  • There must be a valid consolidation certificate issued by Teagasc in relation to the purchase and sale of land, occurring within 24 months of each other. The Minister for Agriculture, Food and the marine has made the necessary guidelines detailing how applications for consolidation certificates are to be made to Teagasc under capital gains tax and also setting out, amongst other things, the conditions of consolidation.
  • The purchaser or purchasers must retain ownership of the land for a period of five years.
  • The conveyance must contain a certificate stating that the purchaser is entitled to the relief
  • A clawback of the relief will apply where the land or part of the land purchased is disposed of or partly disposed of before the end of the 5 year holding period. Such a clawback will not occur where the land purchased is compulsorily acquired.

How stamp duty relief for long-term leases will work

Stamp Duty Relief for long-term leases is a full relief on Stamp Duty payable on long-term leases of farmland.

More information is available here

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