Farmers face an additional €1.4m in stamp duty costs after Minister for Finance Paschal Donohoe announced a hike in the commercial stamp duty rate from 6% to 7.5% in Budget 2020.

Up to one-third of farmers expanding their farm businesses every year are not eligible for agriculture stamp duty reliefs and will be hit with the full 7.5% - which is a total annual tax bill of €7m.

Stamp duty reliefs

The remaining two-thirds of farmers can still avail of consanguinity (blood relative) and farm restructuring relief, which reduces the rate of stamp duty down to 1%.

Trained young farmers are also exempt from stamp duty, but young farmers with big expansion plans will have to be aware of the €70,000 ceiling on reliefs.

Binding agreement

The increase in stamp duty by 1.5% is expected to bring in an additional €141m into Government coffers.

For transactions that were in process before Budget 2020 was announced on Tuesday, they may be able to avail of the previous lower 6% stamp duty rate.

To do this, the Government has said that there has to be proof of a binding contract in place on or before Tuesday 8 October.

It is not possible to be definitive

When stamp duty previously was increased from 2% to 6% in Budget 2018, proof of deposit counted as a binding contract.

However, this time Revenue has not been able to be as clear about what counts as a binding contract.

“It is not possible to be definitive about whether the payment of a deposit either in part or in full would mean that a purchaser had entered into a binding contract for the purchase of a property or whether the deposit was merely a stage in the process leading up to a binding contract,” Revenue said.

“If purchasers are in doubt about the status of a transaction they should consult with their legal advisers to determine whether they had, in fact, entered into binding contracts before 9 October 2019 and, indeed, whether the conveyances will be executed on or before 31 December this year.”

The Irish Farmers Journal received the same response from the Department of Finance on the subject.

The hike in stamp duty takes full effect from 1 January next year.

Read more

Young farmers claim over €16m in stamp duty relief

Revenue relaxes young farmer tax limit