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Stamp Duty

Residential Property

Introduction

The Tanaiste and Minister for Finance announced in his Budget speech on 5 December 2007 that the current stamp duty regime, as it applies to residential property, is being reformed. A simplified system, incorporating an exemption of €125,000 with 2 rate bands instead of the existing 6 rate bands, is being introduced.

Effective Date

The system applies to instruments executed on or after 5 November 2007 and Revenue will, on an administrative basis until the enactment of the Finance Act 2008, give immediate effect to these changes.

New Rates [With New Basis for Calculating Duty]

Under the new system there is an exemption of €125,000 with two rates of 7% and 9%. The 7% rate applies up to €1,000,000 and it is charged on the excess of the consideration over the exempt €125,000. The 9% rate applies where the consideration exceeds €1,000,000 and it is charged on the excess of the consideration over €1,000,000.

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

Examples

Contents

The contents of residential property will no longer be taken into account in determining the stamp duty liability on the consideration attributed to that residential property. However, the total consideration must be apportioned on a bona fide basis between the property and the contents, and surcharges may apply in the event of undervaluation. It should be noted that stamp duty transactions are subject to audit by Revenue.

Example

House and contents purchased for a sum of €400,000, apportioned as to €370,000 to the house and €30,000 to the contents. Stamp duty is calculated on the amount of €370,000 without regard to the sum of €30,000 for the contents.

Aggregation

Aggregation will continue to apply in determining the stamp duty liability where a transaction forms part of a larger transaction or of a series of transactions involving residential property. The stamp duty liability is calculated on the basis of the aggregate consideration. The duty is then apportioned between the separate properties which are transferred by separate instruments and the apportionment is pro rata to the consideration for each property.

Example

Two houses are purchased for a total of €1,200,000 - being the sum of €800,000 for House A and €400,000 for House B. Stamp Duty is calculated on the aggregate consideration of €1,200,000.

Apportionment of duty between House A and House B

House A  €79,250  x  €800,000  /  €1,200,000  =  €52,833

House B  €79,250  x  €400,000  /  €1,200,000  =  €26,416

The apportioned duty has been rounded down to the nearest €.

Refunds

As the new system applies to instruments executed on or after 5 November 2007, a repayment of stamp duty will be made by Revenue where the instrument has been stamped with a greater amount than the stamp duty now chargeable under the new system. The amount of the repayment will be equal to the difference between the stamp duty paid and any lesser amount now chargeable by reference to the new system.

Certificates in Instruments

As a result of the introduction of the new system the required wording of the transaction certificates, to be included in instruments executed after 5 December 2007, has changed. Details of the new certificates are contained in Appendix 2

For instruments executed on or after 5 November 2007 and on or before 5 December 2007, Revenue will apply the new system on the basis of the existing certification requirement. Accordingly, there will be no necessity to amend certificates already inserted in such instruments or to insert any new certificates in these instruments.

Owner-Occupier Reliefs

The above changes do not impact on the existing exemptions for first-time owner-occupying purchasers of new or second-hand residential property or other owner-occupying purchasers of a new dwelling house or apartment with a floor area under 125 square metres. The new rate structure will apply to the reduced chargeable consideration in the case of owner-occupying purchasers of a new dwelling house or apartment with a floor area over 125 square metres.

However, the claw-back period, in relation to the condition prohibiting the letting of the entire property, is being reduced for all three reliefs from 5 to 2 years for instruments executed on or after 5 December 2007. Accordingly, references to the "period specified" in provisions of the Stamp Duties Consolidation Act 1999 in the certificates in those instruments will be taken to be references to a period of 2 years rather than 5 years.

For instruments executed before 5 December 2007, to the extent that a dwelling house or apartment is rented out on or after 5 December 2007, it will not involve a clawback of the relief where this occurs in the third, fourth or fifth year of ownership.

Further Information

Further information may be obtained from:

Dublin Stamping District,
Dublin Region,
Stamping Building,
Dublin Castle,
Dublin 2.
LoCall 1890 48 25 82

Cork Stamp Duty Office,
South West Region,
Government Buildings,
Sullivans Quay,
Cork.
Telephone: 021 43 25 000

Galway Stamp Duty Office,
Border Midlands West Region,
Custom House,
Galway.
Telephone: 091 53 63 00

Appendix 2

The following certification applies to the residential property aspect of a transaction. There is no change in the certification which applies to non-residential property.

1. Where the consideration for the sale (or for the part of that sale attributable to residential property) does not exceed €127,000 and the aggregate residential property transaction does not exceed €127,000.

Certificate A

"It is hereby certified that the consideration (other than rent) for the sale/lease is wholly/partly attributable to residential property and that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which the amount or value or the aggregate amount or value of the consideration which is attributable to residential property exceeds €127,000."

2. Where the consideration (or part) for the sale attributable to residential property exceeds €127,000 and the sale is not part of a larger residential property transaction.

Certificate B

"It is hereby certified that the consideration (other than rent) for the sale/lease is wholly/partly attributable to residential property and that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which, had there been a larger transaction or a series of transactions, the consideration (other than rent) would have been attributable to residential property."

3. Where the consideration (or part) for the sale attributable to residential property exceeds €127,000 and the sale is part of a larger residential property transaction.

Certificate C

"It is hereby certified that the consideration (other than rent) for the sale/lease is wholly/partly attributable to residential property and that the transaction effected by this instrument forms part of a larger transaction or of a series of transactions in respect of which the amount or value of the aggregate consideration (other than rent) which is attributable to residential property is €X " (insert aggregate amount).

4. Where the transaction relates to a mixed property, the residential property aspect should be certified in a accordance with either paragraph 1, 2 or 3 above and the non-residential property aspect should continue to be certified as before in the following manner:

Certificate D

"It is hereby certified that the consideration (other than rent) for the sale/lease is partly attributable to residential property and that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration (other than rent) which is attributable to property which is not residential property exceeds €10,000 / €20,000 / €30,000 / €40,000 / €70,000 / €80,000 / €100,000 / €120,000 / €150,000."

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