FARM TRANSFER BETWEEN RELATED PARTIES – CONSANGUINITY RELIEF
In the recent 2018 Budget, the Minister for Finance increased the stamp duty rate for non-residential property, including agricultural property, from 2% to 6%. Transitional measures applied whereby stamp duty was charged at a rate of 2% on instruments that were executed before 1 January 2018 where there was a binding contract in place before 11 October 2017 and the instrument contained a certificate to this effect.
Consanguinity Relief only applies to land transfers between related parties, which includes lineal descendants, civil partners, civil partner of a parent and adopted children. Prior to the 2018 Budget, Consanguinity Relief reduced stamp duty by 50%, from the then stamp duty rate of 2% to 1% on agricultural lands. The relief was due to expire on the 31st of December 2017 but has now been extended for a further three years, to 31st December 2020. Under the Finance Act, 2017 for farm transfers between related parties, stamp duty on the said transfer will continue to be charged at 1% as opposed to the increased Stamp Duty rate of 6%.
Prior to the introduction of The Finance Act, 2017 to qualify for Consanguinity Relief, the owner or transferor of the lands had to be under 67 years of age, for the relief to apply. The 2017 Act, abolished the said age limit for the transferor. However, the transferee being the person or persons taking the lands, must all be under 67 years of age to qualify for the relief.
There are a number of other certain conditions that must be complied with for the relief to apply, including that the individual to whom the land is conveyed or transferred must either farm the land for a period of six years or lease it for a period of not less than six years to an individual, who will farm the land. There is also a requirement that the person taking on the land must have an specified qualification or obtain same within four years from the date they get the lands, or spend at least 50% of his/her time farming the lands. The lands must be farmed on a commercial basis with the intention of making a profit from same.
Where the various terms and conditions of the Relief are not complied with, the transferee no longer qualifies for the relief. In those circumstances, the transferee must amend hi Stamp Duty Return to remove the relief and pay the additional Stamp Duty and any interest due to Revenue.
By Karl O’Connor, 13 February 2018.