If a farm is to be transferred to you, you may have to pay some tax. One of these taxes is stamp duty.
However, Young Trained Farmers can avail of an exemption from stamp duty on transfers to them before the 31st December 2015. Stamp duty is a tax that arises when property is transferred. The transfer to the young trained farmer may be a gift or a sale. The exemption is set up to encourage the transfer of farmland to a new generation of farmers.
In order for a young trained farmer to benefit from this exemption, there are a number of criteria to be met first;
The farmer must be less than 35 years old.
The farmer must have one of the necessary agricultural qualifications.
The farmer must undertake to spend not less than 50% of his/her normal working time farming the land after the transfer. The land cannot be sold for five years.
If the transfer is to a number of farmers (e.g. two brothers) then both brothers must be young trained farmers and both of them must satisfy the above criteria.
Where you receive the gift of farmland, the second possible tax is “gift tax” (also called “Capital Acquisitions Tax”). However, you may be able to qualify for farmer’s relief of 90% which will reduce the value of the land for tax purposes by 90%. To qualify as a farmer, 80% of your property after the transfer must be agricultural property, livestock, bloodstock or farm machinery but there is no requirement for you to actually be a farmer. Gift tax is paid on the reduced value (i.e. 10% of the value of the land) and the rate is 33%.
The person transferring the land (for example, your parents) might have to pay Capital Gains Tax. This is a tax on the profit made when an asset is disposed of. However, they may be able to claim an exemption from this tax if they are over 55.
At Patrick J Farrell and Company, we will prepare the transfer deed and make the application for stamp duty exemption to the Revenue Commissioners on your behalf.