When is Stamp Duty payable??

I'm finding it very hard to find a concise answer to this question. Could anyone briefly outline the stamp duty situation in the following circumstances:

1. First time buyer of new house.
2. First time buyer of second hand house.
3. Owner-occupier of new house.
4. Owner-occupier of second hand house.


I would very much appreciate any help.

Have you seen

See also [broken link removed] on this issue. In relation to when it's due as far as I know the solicitor must charge it to the client and remit it to Revenue within something like a month or less of the sale closing. Not sure of the precise details though.

Stamp Duty is a tax payable on a Deed or similar. It is normally payable by the purchaser and it must be paid to Revenue and duty impressed on Deed within 28/30 days ( never quite sure) of effective date of Deed which is normally the day the purchaser hands over the funds and is entitled to take possession. If a purchaser is not getting a mortgage i.e. in the happy position of paying cash, then the solicitor has no obligation to do anything other than to warn the purchaser of their obligation to pay and the problems that will ensue if duty not paid ( penalties become due, ownership details cannot be registered and the unstamped Deed cannot be used to prove ownership i.e. in a title dispute).

However in a purchase / mortgage situation, the loan cheque is released to the purchasers solicitor on their very strict undertaking to the lending institution to register title and mortgage. As that cannot happen without deed being stamped, most solicitors will not complete without being in funds to stamp and register. If they did complete without being in funds, they would have a personal obligation to stamp and register.

mf

mf

On the Oasis web-site it says

'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'

I was previously told that owner-occupiers do not pay stamp duty on a new property unless the purchase price is over €500,000 or somewhere like that. Is that incorrect then, and all owner occupiers pay stamp duty?

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

Is - this the bit of information that you are looking for ?

Zar-debt

I was previously told that owner-occupiers do not pay stamp duty on a new property unless the purchase price is over €500,000 or somewhere like that. Is that incorrect then, and all owner occupiers pay stamp duty?

Click to expand...

An auctioneer told me of that 500k threshold recently. I think with a new house, there are two ways of calculating SD based on the value of the site or some proportion of the value of the building. I don't really understand it, but I was happy to take what she said at face value.

There is no such €500K stamp duty threshold. See and [broken link removed]. As already pointed out owner occupiers are exempt from stamp duty on the purchase of a new house under 125sqm regardless of the price. They may be liable for stamp duty on mortgages over some level (can't remember).

If a purchaser is not getting a mortgage i.e. in the happy position of paying cash, then the solicitor has no obligation to do anything other than to warn the purchaser of their obligation to pay and the problems that will ensue if duty not paid ( penalties become due, ownership details cannot be registered and the unstamped Deed cannot be used to prove ownership i.e. in a title dispute).

Click to expand...

MF1,

Am I correct in assuming the solicitor acts as gamekeeper for the Revenue?

If so, how do the Revenue ensure the appropriate stamp duty gets paid when due?

A relief is granted in the case of a transfer to an Owner Occupier of a new
house/apartment without a floor area certificate. Duty in such cases is
charged on the site value or one quarter of the total value whichever is the
greater (excluding VAT on the building costs).

Click to expand...

The above is from the Revenue guide to Stamp Duty and refers to new properties over 125 sq m. According to what I was told, if the value of the property is under €500k then the calculation above results in no Stamp Duty liability. I'm not sure how it works, but let's say you take 500k as the total cost (even including VAT on the building costs) then a quarter of that is 125k which is below the SD threshold of 127k for second-time buyers. That would assume that the value of the site itself is taken to be less than 125k, which is not an unreasonable assumption. So no, 500k is not an official Revenue threshold, but a side-effect of the way the Stamp Duty is calculated. I'd be interested to to find out if there is a specific way to calculate the site value.

Lemurz

No – we’re not gamekeepers. We're professional advisers and we are accountable to the Revenue as such, to the High Court as what is called "officers of the Court" and the Law Society as our governing body.

We act for the client but our professional obligation is to advise the client of their tax payer’s obligations. In addition, as I outlined, where there is a mortgage involved we have a professional obligation to a lending institution.
We also have a secondary responsibility to Revenue for stamp duty i.e. if we are aware that something is amiss and we go along with it (i.e. You've acted for a client already in a property purchase and they now come back and tell you that they are buying a property for the first time) we have a potential liability to Revenue for any outstanding stamp duty.

Stamp duty is a self assessment tax – your concern as (a) a taxpayer and (b) a professional adviser has to be that if the correct tax is not paid at the correct time that down the line thee will be penalties and interest payable on any amount found to be outstanding. Situations where I've seen people come unstuck is e.g. in a marital or non marital split case and tax situations have to be regularised to facilitate a conclusion, Revenue audit cases, probate cases ( if they don’t get you when you’re alive, they get your assets when you’re dead) – the list is endless.

mf

Just came accross this:

New houses or apartments which are purchased by an owner occupier (including a first-time buyer) where there exists a valid floor area compliance certificate issued by the Department of Environment and Local Government stating that the total floor area of the house/apartment does not exceed 125 square metres are exempt, subject to clawback.

Taken from [broken link removed]

Does this mean that if even if I am not a ftb when I go to trade up in a few years time, I will be able to avoid stamp duty as long as the floor area of the property is less than 125 sq. metres?

Secondly, does the size of the site matter to the stamp duty position if the floor area of the house itself is in fact less than 125 sq. metres?

CCOVICH said:

Does this mean that if even if I am not a ftb when I go to trade up in a few years time, I will be able to avoid stamp duty as long as the floor area of the property is less than 125 sq. metres?

Click to expand...

And as long as the property is new (not second hand). First and non first time buyers are exempt from stamp duty on new properties under 125 sqm.

Secondly, does the size of the site matter to the stamp duty position if the floor area of the house itself is in fact less than 125 sq. metres?

Click to expand...

I presume by "site" here you mean the overall grounds (e.g. including gardens etc.) on which the property is built? I think that the size of the overall grounds is irrelevant. If the floor area of the property itself is over 125sqm then the value of the overall site/grounds may be relevant though. Not sure of that answers your question because I'm not totally clear on what you're asking.

Thanks Clubman. Sorry if I was not clear, but your answer was exactly what I was looking for .

What happens if a brother wants to sell his house to his sister and if he gives her a discount of say 30% on the actual market value. Does an independant valuation need to take place at the time of the sale by an auctioneer and can they be swayed to adjust the market value on paper.
I am aware that stamp duty is paid on the market value not the actual price paid but just wondering if there is a bit of leeway here.

Can anyone give any advice on this?

Many thanks

Its actual market value. The problem with an undervalue ( if you can get a professional to commit themselves in writing to a lower value) is that stamp duty is a self assessment tax. If Revenue pull the transaction and query the valuation, they can charge the correct amount of duty, impose penalties plus interest. In addition, this delays the dealing. Further, if there is a lending institution involved, and a mortgage, everything gets even more tied in.

So anything is possible, but what was suggested is not kosher.

mf