Stamp Duty new build which is over the floor area limit

I am looking at buying a new house (I am not a FTB) which is over the floor area limit.

My understanding of the stamp duty calculation is as follows. The stamp duty is based on the higher of the site cost or 25% of the total cost net of VAT. Given that the builder has owned the site for years I will fall into option 2. That gives me a calculation as follows

€460,000/1.135*0.25= €101,322

All OK up to here, I think. So now what % stamp duty do I pay, is the band based on the full value of the house, 7.5%, or is it only on the site value in which case it is 0%?

Thanks

Christy

Re: Stamp Duty new build

Given that the builder has owned the site for years I will fall into option 2.

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I don't understand the above. Is the builder selling by way of contract for sale of a site plus a building agreement to build a house OR is he selling a completed house? If it is a sale of a site, how much is the site being sold for?

Re: Stamp Duty new build

Thanks Vanilla

Just to clarify, the builder is selling me a completed house.

Christy

If the builder is selling a house rather than a site plus building agreement, then the 25% rule doesnt apply at all. You are then looking at stamp duty on the entire figure ( less VAT if applicable), which as a non first time buyer would be at 7.5%. You would really want to check the mechanism with your solicitor as if the house was not substantially complete when you agreed to buy the builder could well have been selling by way of site plus building agreement which would be a substantial tax saving for you.

Vanilla said:

If the builder is selling a house rather than a site plus building agreement, then the 25% rule doesnt apply at all. You are then looking at stamp duty on the entire figure ( less VAT if applicable), which as a non first time buyer would be at 7.5%. You would really want to check the mechanism with your solicitor as if the house was not substantially complete when you agreed to buy the builder could well have been selling by way of site plus building agreement which would be a substantial tax saving for you.

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from the site:

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.

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Christy, if your "chargeable consideration" is below €127k, then you are exempt from SD, IMHO.

As my math is not all that good, perhaps you can explain the sum in the your post. It def looks as if you are exempt.

Vanilla,

I know from your previous posts that you have more experience in legal matters than I but I wonder if you are correct in this instance ?

I have copied the following overview from the Revenue website regarding stamp duty calculation on new build houses over 125 sqm:

New houses or apartments which are purchased by an owner occupier (including a first time buyer) where the total floor area exceeds 125 square metres are charged with duty, at the appropriate residential property rate as per the table above, on the site value (excluding VAT) or one quarter of the total value of the house including the site (excluding VAT)*, whichever is the greater, subject to clawback.The size of the floor area must be certified by a qualified architect, engineer or surveyor

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*my bold

the table referenced above is :

National Reduced
Consideration € First Time Buyer Owner Occupier /Investor
€ 0- 127,000 Exempt Exempt
€ 127,001 - 190,500 Exempt 3%
€ 190,501 - 254,000 Exempt 4%
€ 254,001 - 317,500 Exempt 5%
€ 317,501 - 381,000 3% 6%
€ 381,001 - 635,000 6% 7.5%
€ 635,000 or more 9% 9%

Christy, if your calculations are correct then you are exempt from Stamp Duty

(I'm not sure which VAT rate applies - 13.5% or 21%?)

edit: Post crossed with irishpancake

Vanilla, for what it's worth my solicitor made a similar error in calculation / interpretation when I bought my present house and he paid the Revenue over €37,000 of my money (without authorisation I might add) as a payment for stamp duty! It took over three months to get the money returned by the Revenue.

If its a new build AND is being sold by way of site/building agreement, but I'm getting the impression that it is not a new build at all- ie Christy mentions that his builder owned it for a number of years, or that it is being sold by way of a contract for a completed house rather than by way of site and building agreement. The MECHANISM being used to sell it is relevant to whether the exemption applies. That is why I have doubts that the exemption may apply and why I said that he should check with his solicitor.

Vanilla,

We are assuming new build as the title of the Thread is

Stamp Duty new build which is over the floor area limit

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Vanilla,

I think that Christy is saying that the builder owned the site for years but not the house.

Christy, re my previous experience with my solicitor make sure you have all the facts and calculations yourself before agreeing to pay anything.

Thanks for all the replies. The builder owned the site for a number of years before he built on it. I am not sure how long the house is completed, maybe 1 or 2 years, but it has never been lived in. From my readings of Vanillas post I will need to make sure that my solicitor gets the transaction correct in order to avoid paying unnecessary stamp duty.

Christy

Hi Christy, As I suspected this is a particular case which needs to be examined carefully by your solicitor before you commit to the purchase. The fact that the house has been built for a while now is a little worrying, but if as you say, it has not been occupied, you might well still qualify for the exemption. The other issue would be whether the appropriate architects certificate as per the REvenue requirements will be available ( i.e "For instruments executed on or after 1 July 2004 (other than instruments executed in pursuance of binding contracts entered into before 1 April 2004) the relief will only apply where the floor area of the house is greater than 125 sq. m. and is so certified by a qualified architect, engineer or surveyor, as set down in regulations (Housing (Floor Area Compliance Certificate Inspection) Regulations, 2004 (SI 128/04)) made by the Minister for the Environment, Heritage and Local Government")

Let us know how you get on.

Thanks for all your advice on this Vanilla & all the others, I will get onto my solicitor straight away about it.

Christy

I must say fair play to you Vanilla for spotting that this was not as straight-forward as first appeared to untrained eyes


I think Christy is a very happy man for having asked questions in this forum, and even happier that someone of Vanilla's calibre is available to give free advise.

Best of luck Christy

Aw shucks! Actually I thought I might be making a mountain out of a mole hill for a bit there, but I had this sneaky feeling....