Duhallow Properties - Stamp Duty

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.*

*If the first-time buyer rents the house within five years Revenue will claim back or 'clawback' the difference between the higher stamp duty rates and the duty actually paid. The only exception to this is the 'Rent a Room' scheme where part of the house is rented out. However if the house is sold there is no clawback.

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,
their former spouse continues to occupy the home.

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 (or up to the date of a sale during this period).

A stamp duty 'clawback' arises where rent, other than under the 'Rent a Room scheme' is obtained within the five 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.

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 if the Chargeable Consideration is above the relevant exemption threshold. (The stamp duty is assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure. This figure is called the Chargeable Consideration.

Stamp duty rates for first-time buyers

Stamp duty rates for first-time buyers who are owner-occupiers of second-hand residential property were changed significantly in Budget 2005. 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 2nd December, 2004. The exemption rate has been increased to 317,500 euro, meaning first-time buyers who are owner-occupiers of second-hand residential property will not have to pay stamp duty on homes up to that value. The same buyers can avail of reduced rates on properties up to a value of 635,000 euro. These new rate structures also apply to new properties with a floor area of more than 125 sq. metres.

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.

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 euro. 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 2005 Finance Bill provides 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 will be 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 will apply for a two year period and full details, including the qualifying conditions, are contained in the Finance Bill.

Rates

Rates of stamp duty for new houses and apartments with a floor area greater than 125 sq. metres and a Floor Area Compliance Certificate

Chargeable consideration	First Time Buyer	Owner Occupier
Less than 127,000 euro	Exempt	Exempt
127,001 euro - 190,500 euro	Exempt	3%
190,501 euro - 254,000 euro	Exempt	4%
254,001 euro -317,500 euro	Exempt	5%
317,501 euro - 381,000 euro	3%	6%
381,001 euro - 635,000 euro	6%	7.5%
Over 635,000 euro	9%	9%

Rates of stamp duty for second-hand houses and apartments for first-time buyers

The percentages shown in the tables below apply to the full purchase price of the property. For example, if you are a first-time buyer of a house costing 600,000 euro you must pay 6% of 600,000 euro (e.g. 36,000 euro) in stamp duty.

House price	Rate of stamp duty
Up to 317,500 euro	Exempt
317,501 euro - 381,000 euro	3%
381,000 euro - 635,000 euro	6%
Over 635,000 euro	9%

Rates of stamp duty for second-hand houses and apartments for other owner-occupiers (and investors)

House price	Rate of stamp duty
Up to 127,000 euro	Exempt
127,001 euro - 190,500 euro	3%
190,501 euro - 254,000 euro	4%
254,001 euro - 317,500 euro	5%
317,501 euro - 381,000 euro	6%
381,001 euro - 635,000 euro	7.5%
Over 635,000 euro	9%

Rates of stamp duty on land/housing sites without residential buildings

Up to 10,000 euro	Exempt
10,001 euro - 20,000 euro	1%
20,001 euro - 30,000 euro	2%
30,001 euro - 40,000 euro	3%
40,001 euro - 70,000 euro	4%
70,001 euro - 80,000 euro	5%
80,001 euro - 100,000 euro	6%
100,001 euro - 120,000 euro	7%
120,001 euro - 150,000 euro	8%
Over 150,000 euro	9%

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:

Dublin Stamping District,

(Dublin Region),

Stamping Building,

Dublin Castle,

Dublin 2.

Lo-call: 1890 48 25 82

Cork Stamp Duty Office,

South West Region,

Government Buildings,

Sullivan's Quay,

Cork

Lo-call: (021) 49 68 783

Galway Stamp Duty Office,

Border Midlands West Region,

Custom House,

Flood Street,

Galway.

Lo-call: (091) 53 63 00