Farm consolidation relief is a stamp duty relief. It applies where a farmer meets certain qualifying criteria and in particular where he sells a farm in one location for the purposes of buying a farm near to where the farmer is currently active. So a farmer could be farming in townland A and also has a farm in townland Z, 20 miles away. A parcel of land in townland B neighbouring the farm in townland A has come up for sale. The farmer decides to sell townland Z to buy townland B and thus bring the farm in townland B together with his/her farm in townland A into one holding. When the farmer buys the farm in townland B as long as he/she meets the criteria of the relief, he can buy this farm and pay stamp duty at 1% rather than the normal 7.5%. Not only that, he or she only pays stamp duty on the difference between the value of the farm sold and the value of the farm purchased.

There are a range of conditions with the relief and I set out below a booklet of the conditions from Revenue. One important aspect of the relief is that if a farmer decides to sell a site or a portion of ground from the farm acquired then the farmer will lose a proportional benefit of the relief. There is a clawback of the relief if the farmer sells within years of applying for the relief. So if a farmer buys an 50 acre farm but then sells 5 acres, the farmer will lose the benefit of the relief with respect to that portion. So say the price differential for the 50 acre farm was €1,000,000. Then the farmer would have paid 1% on €1,000,000 instead of 7.5%. As the 5 acres represent 10% of the farm, then the farmer, with respect to that 10% paid 1% on €100,000. Now the farmer must pay 7.5% on that €100,000. As the farmer has paid 1% already, the clawback is €6,500.

There is a similar approach with respect to the clawback of agricultural relief. With respect to agricultural relief, clawback is calculated by looking at the proportional value of the land being sold, as it bears the current value of the entire farm. So if a portion of land is being sold is worth €750000 and the total land at the date of sale is worth €2 million, that means that 37.5% of the agricultural relief claimed must be paid back.

A distinction between the two clawbacks, is that for farm consolidation relief the claw back period is 5 years, while for agricultural relief the clawback period is 6 years. Further, there is no clawback of relief of farm consolidation relief for compulsory purchase, which is not the case with agricultural relief. Also, it is not clear with respect to clawback of consolidation relief, is the clawback based on the proportional size of the property being disposed of or the value of the property being disposed of. With respect to agricultural relief, there is a set formula as to how to calculate the clawback in s. 89(4)(aa) of CATCA 2003.

Hopefully, this helps and if you have any probate, tax, will drafting, or capacity issues, please do not hesitate to contact me at colm@theprobatehub.ie.

I attach here a booklet on farm consolidation relief