TAXATION ADVISORY

STAMP DUTY

Stamp Duty is a duty or tax on documents and not on transactions or persons. If a transaction or transfer can be carried out legally without the use of a written document, then there is nothing to stamp and therefore no charge to Stamp Duty. The most common event giving rise to a Stamp Duty charge for a farmer is the transfer of land and buildings. The transfer of livestock, machinery and assets can be transferred by delivery rather than written agreement and therefore should not be subject to Stamp Duty.

Transfers on Death

If a person transfers their property during their lifetime, the transfer is liable to Stamp Duty, but if transferred on death, no stamp duty is payable.

Husband and Wife Exempt

Transfers between a husband and wife married to each other are exempt from Stamp Duty.

Stamp Duty Rate on Land Transfers

Different rates apply to the transfer of residential property and this involves valuing the residence separately.

Current rates of Stamp Duty on Land Transfers

Up to 10,000		Exempt
10,001 to 20,000		1%
20,001 to 30,000		2%
30,001 to 40,000		3%
40,001 to 70,000		4%
70,001 to 80,000		5%
Excess over 80,000		6%

Transfers between Related Persons

Where the transfer is between related persons, e.g. parent, brother, sister, uncle, aunt, nephew, niece etc. the rate of stamp duty is half the rate that would otherwise ordinarily apply.

Stamp Duty on Transfers of Residential Property

Consideration		Rate
First 125,000		Nil
Next 875,000		7%
Excess over 1,000,000		9%

There is an exemption from stamp duty for purchases of certain smaller new residential properties where the purchaser is an owner-occupier but not a first-time buyer, and there is also a reduction in stamp duty for similar purchasers of certain larger new residential properties.

Stamp Duty on Leases

Where land is Leased at Full Open Market Rent.

A rate of 1% of the annual rent payable under the lease is assessed for Stamp Duty purposes. e.g. Annual lease rental - 100 acres @ €150 per acre=€15,000 x 1% =€150

Where land is Leased at Less than Open Market Rent.

If it is considered by the Revenue Commissioners that the land is being leased at less than the open market rent then the difference between the open market rent and the amount being paid is multiplied by the number of years of the lease and stamp duty is levied at the normal rates on that amount.

Farm Consolidation Relief

A stamp duty relief exists for land sales and purchases resulting in consolidation of a farmer's holding occurring within 18 months, in the period commencing July 1st 2007 to June 30th 2011. If the aggregate sales are equal to or greater than the aggregate purchases, stamp duty may be avoided. Stamp duty will only be paid on the purchase to the extent that the value of the farm land that is purchased exceeds the value of the farm land sold.

If the sale takes place before the purchase, then relief will be given at the time of the purchase. However, if the purchase takes place first, then the stamp duty will have to be paid but on the subsequent sale a claim for repayment can be made to the Revenue Commissioners.

The main conditions to be satisfied before the Revenue Commissioners will grant relief are:

• The purchase and sale of the land must occur within an 18-month period
• The farmer involved in the purchase of the land must sign a declaration for submission to the Revenue Commissioners, to the effect that he will remain a farmer and will farm the land purchased for at least 5 years, and
• Both the purchase and sale of the lands must be in the period July 1st, 2007 and June 30th, 2011.
• There must be a valid consolidation certificate issued by Teagasc in relation to the purchase and sale of lands
• The instrument giving effect to the purchase of the land must be submitted to the Revenue Commissioners for adjudication.

Provision for claw-back of the relief is provided where the land is disposed of before the end of the 5 year holding period but will not occur if the disposal is compulsory.

What land can be sold and purchased in a farm consolidation?

Land sold and purchased as part of a farm consolidation must comply with the following conditions:
(a) The land must be in the state
(b) The land must be agricultural land or afforested land
(c) The land must not contain residential buildings.

What is consolidation?

The interaction of the sale and purchase together must result in the reduction in the number of separate parcels of land comprised in the existing farm, or an overall reduction in the distance between existing parcels comprised in the farm, including leased land with a minimum of 5 years to run. The sale of an existing farm, comprising a number of separate parcels, and the replacement of it by the purchase of another farm, comprising a lesser number of separate parcels will not be regarded as farm consolidation for the purposes of the relief.

Transferring a Site to a Family Member

Similar to the capital gains tax exemption granted on the transfer of a site to a son/daughter a similar relief exists where a site of up to one acre is transferred from a parent to a child provided it is for the construction of the child's principal private residence and the market value of the site does not exceed €500,000. It is a condition that a parent can only transfer one site to each child for the purposes of this exemption. There are claw-back provisions if the conditions have not been satisfied prior to a subsequent disposal.

Transfer of Farmland from Child to Parent

Stamp Duty Relief exists in respect of transfers of farmland from a child to a parent as consideration for land transferring from the parents to the child where the Capital Gains Tax Retirement Relief ownership and use provisions have been met.

RELIEF ON TRANSFERS TO YOUNG TRAINED FARMERS

A farmer under 35 years of age who has/ will satisfy certain education requirements may acquire land free of stamp duty. The relief applies to sales and gifts occurring on or before 31st December 2012. Young farmers intending to avail of this relief should contact their local Teagasc office in order to assess their eligibility because the 2007 Finance Act introduced new educational criteria with effect from 31st March 2008. There are transitional arrangements relating to the phasing in of the new criteria.

New Minimum Education Requirements from 31st March 2008.

1.Qualifications awarded by the Further Education and Training Awards Council:

(a) Level 6 Advanced Certificate in Farming;
(b) Level 6 Advanced Certificate in Agriculture;
(c) Level 6 Advanced Certificate in Dairy Herd Management;
(d) Level 6 Advanced Certificate in Drystock Management;
(e) Level 6 Advanced Certificate in Agricultural Mechanisation;
(f) Level 6 Advanced Certificate in Farm Management;
(g) Level 6 Advanced Certificate in Machinery and Crop Management;
(h) Level 6 Advanced Certificate in Horticulture;
(i) Level 6 Advanced Certificate in Forestry;
(j) Level 6 Advanced Certificate in Stud Management;
(k) Level 6 Advanced Certificate in Horsemanship.

2.Qualifications awarded by the Higher Education and Training Awards Council:

(a) Higher Certificate in Agriculture;
(b) Bachelor of Science in Agriculture;
(c) Higher Certificate in Agricultural Science;
(d) Bachelor of Science in Agricultural Science;
(e) Bachelor of Science (Honours) in Land Management, Agriculture;
(f) Bachelor of Science (Honours) in Land Management, Horticulture;
(g) Bachelor of Science (Honours) in Land Management, Forestry;
(h) Higher Certificate in Engineering in Agricultural Mechanisation;
(i) Bachelor of Business in Rural Enterprise and Agri-Business;
(j) Bachelor of Science in Agriculture and Environmental Management;
(k) Bachelor of Science in Horticulture;
(l) Bachelor of Arts (Honours) in Horticultural Management;
(m) Bachelor of Science in Forestry;
(n) Higher Certificate in Business Equine Studies;
(o) Bachelor of Business in Equine Studies.

3.Qualifications awarded by other third- level institutions:

(a) Bachelor of Agricultural Science - Animal Crop Production awarded by University College Dublin;
(b) Bachelor of Agricutural Science, - Animal Science awarded by University College Dublin;
(c) Bachelor of Agricultural Science - Food and Agribusiness Management awarded by University College Dublin
(d) Bachelor of Agricultural Science - Forestry awarded by University College Dublin;
(e) Bachelor of Agricultural Science - Horticulture, Landscape and Sports-turf Management awarded by University College Dublin;
(f) Bachelor of Veterinary Medicine awarded by University College Dublin;
(g) Bachelor of Science in Equine Science awarded by the University of Limerick;
(h) Diploma in Equine Science awarded by the University of Limerick.

Important Conditions worth noting

• The Young Trained Farmer must spend not less than 50% of his/her time farming the land for at least 5 years subsequent to the transfer or conveyance.
• He/she must not dispose of all or part of the lands for a period of 5 years unless such lands are replaced within one year of disposal.

Refunds Procedure

The refunds procedure has been simplified with the following changes being made:

• The time limit within which Young Trained Farmers can complete their education, following the transfer of land, is being extended from 3 to 4 years.
• There is no longer a requirement for specific minimum education attainments at the date of transfer.
• The time frame in which a refund claim can be made is being extended from within six months to within four years of attaining the educational qualification.
• The 5 year period the Young Trained Farmer is required to retain the land will only begin in the case of a refund from the date the refund claim is made and not the date of the transfer.

Tax Planning Points on Stamp Duty

• No stamp duty arises on the sale of commercial forestry.
• Stamp duty may not apply on the sale/transfer of a site to a son/daughter.
• There is no stamp duty on inheritances.
• Transfers between spouses does not attract stamp duty.
• Below market rent leases can result in additional stamp duty, income tax & gift tax.

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In reading this taxation section interpret the word "he" as meaning he or she and the law stated as at 1st November 2008 incorporating the 2009 budget proposals.

Disclaimer: The taxation content prepared by IFAC Accountants in this publication is intended as an aid to farmers and has been written in general terms and is intended as a guide only and is not intended to be a comprehensive statement of relevant law or regulation with its application to specific situations depending on the particular circumstances involved.

It should not be used as a basis of any conclusion drawn or argument made and the original legislation should be consulted at all times. Accordingly, the reader should seek proper professional advice if acting on any of the issues outlined in this publication and this publication should not be relied upon as a substitute for such advice. While every effort has been made to ensure accuracy, the author or publisher will not accept any liability for loss, distress or damage resulting from any errors or omissions.