Farmers backlash over stamp duty hike on the sale of farms
FARMERS are urging the Government to take active farmland out of the new 6% stamp duty on sales announced in the Budget.
And they have also called for Agriculture Minister Michael Creed to honour his commitment.
During his post-Budget statement on Tuesday, Mr Creed said that farmland sales would be exempt from the new 6% levy and remain at 2%, although no such exemption had been mentioned earlier in the day by Finance Minister Paschal Donohoe.
A motion to exclude farm sales from the hike was later defeated in the Dáil and it is now to be treated as commercial land.
The Irish Farmers Association (IFA) is now making a case for the exemption for farmland to be a ‘special case’ to be retained and for stamp duty to remain at 2%.
Minister Donohoe did retain a ‘consanguinity’ stamp duty relief of 1% for interfamily transfers from a 67-year-old who is transferring land for a further three years and kept on a total exemption for trained farmers under 35 years of age for the same length of time.
The consanguinity scheme aims to encourage continuing inter-generational use of farms sooner, rather than see the farm be transferred through a deceased owner.
Speaking to the Irish Daily Mail, IFA President Joe Healy last night said that farmers will pursue the 2% retention as active farmland is a ‘special case’. ‘It’s obvious there was a breakdown between the Department of Finance and the Department of Agriculture,’ he said.
‘There were different signals coming from both sections on Budget Day. We’re looking for the 2% to be the outcome regardless of who is right and who is wrong.’
He added: ‘We want the Finance Act to allow for land purchase or transferred and used for farming, that’s important, used for farming, to remain at 2%. There is precedent there with the Revenue to classify it as farmland.
‘We want to get it changed back to 2% and are lobbying to do so before the Finance Act comes in. It’s so important.
‘We’ve an ageing and small farm structure with an average farm-size of 37 hectares, an average income of €26,000 and we face so many challenges like low commodity prices, Brexit, which is the biggest challenge of our life-time, and international trade deals.
‘The last thing we want is more impediments or obstacles to come in the way and this is a costly one. For a guy who buys 50 acres, for example, and pays €500,000 for it, his stamp duty goes from €10,000 to €30,000.
‘It’s just incredible that they would come out with something like this. It shows a lack of interest and knowledge of what is needed to encourage the productive aspect of Irish farming. The Minister must go back and plead the case.
‘If residential development land can be excluded from the rate then land purchased
for farming can be excluded,’ he said.
When contacted by the Mail, the department confirmed the young farmer exemption and the consanguinity relief term-extensions but said the increased stamp duty applied to ‘all’ non-residential property.
‘The Budget announcement by Minister Donohoe relates to an increase in the stamp duty rate for all non-residential property transactions from 2% to 6% with a refund scheme to operate for land purchased for housing development where the development commences within 30 months of land purchase.
‘The Finance Bill will provide details on transitional arrangement for those with signed contracts and the Department of Agriculture are seeking to examine a potential change to the consanguinity upper age limit also in that context,’ said an Agriculture spokesperson.
According to the IFA, around 5,000 farms were sold last year, amounting to 34,000 acres transferred.
Of those, 700 were to farmers under 35 years of age, while 850 were under the ‘consanguinity’ scheme, leaving 3,300 coming under the 2% stamp duty rate, now liable for 6%.
The Finance Bill is due to be published on October 19. Efforts by the Mail to contact Minister Creed last night were unsuccessful.