Stamp Duty Rates

Stamp Duty in Ireland
Stamp duty in Ireland is a tax payable to the Government based on the documents used in the transfer of property. (In other words, the conveyance document which transfers ownership to you). The value of the property (i.e., home or apartment, land or housing site) and your status (i.e., whether you are a first-time buyer, investor, etc.) will determine the amount of stamp duty that is payable. Stamp duty is divided up into different categories and rates and the amount you pay will depend on:

> Whether you are going to live in the house or apartment (residential or owner-occupier) or are an investor
> Whether as an owner-occupier, you are a first time buyer
> Whether it is a new or second-hand house or apartment
> The size of the house or apartment

Stamp duty is also payable on land/housing sites without residential buildings. Where your agreement to buy a site is linked to a construction contract, stamp duty may be payable on the full amount of the site plus the construction contract.

First time buyers
A first-time buyer is defined as a person (or where there is more than one buyer, each person):
> Who has not on any previous occasion, either individually or jointly, purchased or built on his/her own behalf a house in Ireland or abroad;
> Where the property purchased is occupied by the purchaser or a person on his/her behalf as his/her only or principal place of residence and
> Where no rent is derived from the property for five years after completion of the current purchase.

A divorced or separated person is considered a first-time buyer in the following circumstances:
> If they have left their former marital home and,
> Do not retain any interest in the martial home and,
> If immediately prior to the date of the judicial separation, deed of separation, decree of divorce or decree of nullity he/she is not entitled to an interest in a house other than the marital home
> At the date of the judicial separation, deed of separation, decree of divorce or decree of nullity, your separated or former spouse must be living in the house which was occupied by you both before your separation or divorce.

The Revenue Commissioners have published a leaflet on ‘First-time buyer relief’ with frequently asked questions (FAQs) on first-time buyers and stamp duty.

Non-owner-occupiers and investors
People who rent out new or second-hand houses or apartments are considered ‘investors’. The same rates of stamp duty apply to investors as to non-first time owner-occupiers (See Rules below).

Rules

Stamp duty on new houses and apartments
Owner-occupiers of new houses/apartments are exempt from stamp duty, provided that the area of the house or apartment does not exceed 125 sq. metres (1,346 sq. feet) and a Floor Area Compliance Certificate has been issued. The house or apartment must not have been occupied prior to its purchase. It must be occupied as the owner’s main place of residence for a period of five years from the date of the purchase deed. However if you sell the house during this period you do not have to repay stamp duty.

A stamp duty ‘clawback’ arises where rent, other than under the ‘Rent a Room scheme’ is obtained within the two year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of obtaining the benefit of the reduced rates. The threshold was reduced from five years to two in December 2007.

Under the ‘ Rent a Room scheme’, there is no stamp duty clawback where rent is received by the person in occupation of the house or apartment on or after 6th April, 2001 for letting of furnished accommodation in part of the house.

If the area of the house or flat is greater than 125 sq. metres (1,346 sq.feet), some stamp duty is payable. The stamp duty is assessed on either the cost of the site or 25% of the costof the site plus the building costs (less VAT), whichever is the greater figure. This figure is called as the Notional Reduced Consideration.

Stamp duty rates for first-time buyers
Stamp duty rates for first-time buyers who are owner-occupiers of new or second-hand residential property were changed significantly in June 2007. The change affects any legal instruments (e.g. the deed of conveyance or transfer or lease giving effect to the contract) relating to a first-time buyer buying a residential property on or after 31 March 2007.

Stamp duty rates for non-owner-occupiers
Non-owner-occupiers are liable for stamp duty on both new and second-hand houses or apartments. The same rates of stamp duty apply to investors as to non-first time owner-occupiers. The way stamp duty is levied was significantly altered in December 2007.

Transfer of property between relatives
Stamp duty is payable at half the normal rate applicable if there is a transfer of property (other than shares) to certain relatives (e.g., a parent, grandparent, step-parent, child, brother, sister, half-brother, half-sister, aunt, uncle, niece or nephew). This relief is not available on leases or on transactions involving cousins and/or in-laws.

Site transfers from parent to child
Stamp Duty and Capital Gains Tax do not apply where a parent transfers a site to a child. The site must be for the construction of the child’s principal private residence and the market value of the site must not greater than €253,947.62. A parent can only transfer one site to each child to take advantage of this exemption. If the child then sells the site without the principal private residence being built and lived in for 3 years, there will be a clawback of the capital gains tax relief permitted. There will be no clawback if the child dies.

Stamp duty relief for exchange of farmland for farm consolidation purposes
The Finance Act 2005 (pdf) provided a new stamp duty relief for an exchange of farmland between two farmers. This applies when farmers exchange land in order to consolidate their holdings. The stamp duty is applied to the difference in value between the lands concerned. Formerly each farmer was liable to the full stamp duty on property s/he receives. This once-off relief applies for a two year period and full details, including the qualifying conditions, are set out in Revenue’s “Stamp Duty Farm Consolidation Relief” (pdf)leaflet.

Rates
Stamp duty is levied as follows:
Up to €125,000: Exempt
Next €875,000: 7%
Balance: 9%

The reformed residential Stamp Duty regime removes the distortionary effects of the pre-existing regime. Full details are available in Annex G of the Budget 2008.

How to apply
Your solicitor will calculate how much stamp duty is due and request this from you prior to the closing of the sale. The amount is paid to the Revenue Commissioners who place a stamp on the property deeds. Without this stamp, the deeds cannot be registered.

Further information
Further information on all aspects of stamp duty may be obtained from:

Stamp Duty Office,
Capital Taxes Division,
Stamping Building,
Dublin Castle,
Dublin 2.

Lo-call: 1890 48 25 82

Stamp Duty Office,
Government Buildings,
Sullivan’s Quay,
Cork

Lo-call: 21 49 68 783

Stamp Duty Office,
Custom House,
Galway.

Tel: +353 (0)91 536 300

The material above is copyright OASIS and is reproduced with permission.

*To fully preserve the existing exemption, transactions, where the consideration (or aggregate consideration) does not exceed €127,000, are exempt from stamp duty.
Examples

For further information please contact our office directly on 052 29487 or log onto www.revenue.ie