The increase in stamp duty in last October’s budget was met with a mix of trepidation and hesitancy from auctioneers nationwide. In cases where sales fell through, the negative sentiment toward the increase was stronger. But, on reflection, what is the most common viewpoint put forth by auctioneers in Ireland toward the issue? Anthony Jordan reports

1 More expensive sales

The increase has made land sales more expensive for the purchaser according to some auctioneers. For example, a sale to the value of €400,000 before last year’s budget would have merited an €8,000 stamp duty bill at 2%. Afterwards, this would have risen to €24,000 at 6%, slapping an extra €16,000 on to the final bill.

2 More land leasing

Land leasing has become more popular over the last number of years. Most recent interest has been fuelled by potentially more expensive land sales brought on by the increase in stamp duty. Auctioneers have cited farmers wishing to buy parcels have been guided more towards leasing rather than purchase as the price tag gets higher.

3 Sales have decreased

Some farmers’ inability to pay for parcels of land has led to a slower market in areas, auctioneers have claimed. A higher final bill has put off would be buyers or has caused sales to fall through.

4 Stamp duty rise hasn’t really had a strong impact

Some auctioneers have seen no real impact at all. Sales have continued with the same strength as before and the appetite for land is still high. If the competition for a parcel is there and farmers have the financial muscle to pay, sales won’t be affected.

5 Potential impact on auctions

The success in the auction room is heavily dependent on those interested obtaining the finance to purchase the parcel. If a rise in stamp duty is hindering getting such finance, auctioneers feel auctions could be negatively affected.

6 Smaller farmers at a disadvantage

With land prices up by 3.61% in 2017, smaller farmers are generally feeling the pinch when competing with larger operators with more financial muscle. There are auctioneers who believe that the additional cost of 6% stamp duty will only add to this disparity.

7 Reduced land prices

The prices of some parcels may fall as farmers are unwilling to compensate for the higher stamp duty bill. For example, a farmer who would have paid €100,000 at 2% stamp duty (€102,000) may now only pay €95,000 at 6% stamp duty (€100,700) because that is what his budget will allow or what he is willing to pay. In simple terms, to compensate for the increased stamp duty bill, farmers may reduce their budget and hence some land prices may fall.

8 Little that can be done

As outlined by Declan McEvoy, head of tax in IFAC, stamp duty had reduced from 9% to 2% before increasing again last October. Some have told the Irish Farmers Journal that a rise was inevitable.

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