Talk to Tormeys: Stamp duty - farm consolidation relief
Farm Consolidation Relief is a stamp duty relief which applies to exchanges of farmland effected from August 1, 2018 to December 31, 2022.
The purpose of the relief is to encourage consolidation of farm holdings and improve the viability and operation of farms. The effect of availing of the relief means that stamp duty is only paid on the difference in value between the land purchased/sold or exchanged at a reduced rate of 1% as opposed to the current rate of stamp duty on agricultural land of 7.5%.
Where the lands purchased/sold or exchanged are of equal value, then there is no stamp duty payable. In order to avail of the relief, there are a number of qualifying conditions:-
The types of property that qualify for the relief are:
a) Agricultural land;
b) Land suitable for occupation as woodlands on a commercial basis; and
c) Such farm buildings as are of character appropriate to the land on which they are situated.
Qualifying land does not include dwelling houses or land occupied by such houses unless they are derelict
The relief is only available to individuals and not to companies. Where land is purchased or sold by joint owners, only one of them need be a farmer. To qualify as a farmer for this relief, a person must spend not less than 50% of his or her normal working time farming. Normal working time is deemed to be 40 hours per week. This allows farmers with other employment to qualify for the relief where they spend at least 20 hours per week farming averaged over a year.
The Department of Agriculture has published guidelines and conditions for farm consolidation called the Farm Restructuring Guidelines. To claim this relief, a farmer should apply for and obtain a Consolidation Certificate from Teagasc certifying that the conditions for consolidation are satisfied.
For sales and purchases, the farmer must sell the land in the period starting January 1, 2018 and ending on December 31, 2022 and must buy other land in the same period.
The sale and the purchase must however, take place within 24 months of each other. A farmer may also exchange land instead of purchasing and selling lands. If both parcels of land are not of equal value, “equality money” may be paid to make up the difference. Stamp duty is payable at a rate of 1% of this value.
Retention of land
A farmer must retain ownership of the land purchased or received by way of exchange and must use the land for farming for a period of 5 years from the date on which the relief is claimed.
Clawback of relief and penalties
The Relief is subject to clawback where the land purchased, or received by way of exchange, or part of that land, is disposed of within 5 years of the date on which the claim for relief was made.
The amount of the clawback is the difference between the stamp duty that would have been payable if the relief did not apply and any duty actually paid that is not repayable.
The clawback also includes the usual interest charged on the late or non-payment of tax calculated from the date of disposal to the date on which the clawback amount is paid to Revenue.
*The above article consists of general recommendations and should not be interpreted as legal advice. You should contact a Solicitor to secure advice specific to your individual requirements. In contentious business, a Solicitor may not calculate fees or other charges as a percentage or proportion of any award or settlement.
Tormeys Solicitors have been serving the people of the midlands for almost a century, specialising in *Personal Injury, *Medical Negligence, *Conveyancing, *Probate, *Commercial Law and *Employment Law
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