Revenue clampdown on investor stamp duty

Glenbhoy

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What is the rationale behind having to occupy the house? This is probably in order to stop persons with more than one property abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean? If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!
 

RainyDay

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Glenbhoy said:
One other point, could this be a little bit of misinformation fed by the revenue to the press in order to boost compliance? I agree with Stuart though, that if the revenue were ever to get their house in order and have a fully integrated IT system (any offers D&T), it would be incredibly easy to catch the evaders!
It's happening today - Accenture beat D&T for this one.
 

badabing

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Glenbhoy said:
What is the rationale behind having to occupy the house? This is probably in order to stop persons with more than one property abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean? If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!
Absolutely, it would be impossible to construct an arguement otherwise. If you go on holidays for a while you don't change from being an owner occupier even though you don't occupy the house at the time. Who sets the time limit on this? You still officially occupy the house while on an extended holiday
 

RainyDay

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badabing said:
Absolutely, it would be impossible to construct an arguement otherwise. If you go on holidays for a while you don't change from being an owner occupier even though you don't occupy the house at the time. Who sets the time limit on this? You still officially occupy the house while on an extended holiday
Glenbhoy said:
What is the rationale behind having to occupy the house? This is probably in order to stop persons with more than one property abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean? If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!
I'm always amazed at these broad, assumptions/claims that you can 'beat the system' which have no basis in fact or experience. Do you really think the guys in Revenue are that dumb? Do you think you're the first genius to try to scam the system by producing some old bills?

It would be very foolish to proceed on the basis that you're going to be the one to 'beat the system'.
 

badabing

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RainyDay said:
I'm always amazed at these broad, assumptions/claims that you can 'beat the system' which have no basis in fact or experience. Do you really think the guys in Revenue are that dumb? Do you think you're the first genius to try to scam the system by producing some old bills?

It would be very foolish to proceed on the basis that you're going to be the one to 'beat the system'.
No-one is suggetsing beating the system, just using it to your advantage. I omitted some important points earlier.

You must not rent the house out wholly. You can rent a maximum of 2 rooms and must keep a room for yourself at all times. If you are under the annual rent a room income limit and do not take up residence elsewhere, I fail to see how this can be viewed as tax evasion when all you are doing is taking an extended holiday
 

RainyDay

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badabing said:
do not take up residence elsewhere, I fail to see how this can be viewed as tax evasion when all you are doing is taking an extended holiday
So let's pretend that I'm the Revenue inspector.

So how long was the holiday for, Mr Bing? So where were you resident for this period, Mr Bing? So did you fund the holiday, given your modest taxable income, Mr Bing? So can I see your credit card statements showing your holiday spending, Mr Bing?
 

Glenbhoy

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I agree completely with badabing, it's not about beating the system in this case, it's more like natural justice. In the example above, a person had one property in this country, she went away for a year and rented some rooms in the property to cover the mortgage (may even have changed it to interest only:)). Why should she have to repay her stamp duty when she intends to re-occupy the property? As pointed out previously, what timescale determines non-occupation? I know a number of people who took 3 months to visit NZ for the Lions tour, some of them rented their apartments while gone, technically they were in breach of the legislation too, but I douubt if any court would back the revenue on this one (since the lads probably ended up drinking with judges in NZ at some point).
 

RainyDay

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I don't see how allowing one person to evade tax is considered 'natural justice' - How is this just for the bulk of compliant taxpayers who paid their due taxes.

In relation to a 3 month rental, I'd be surprised if Revenue and/or any court would be aggresively chasing down such cases. But the law is the law. If it's unjust, then start working to get the law changed - don't take it into your own hands.
 

ubiquitous

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There is at the very least, a very arguable case that a person's residence remains their "principal private residence" even if they are not living there for a period, once of course they haven't set up permanent residence elsewhere in the meantime.

In the case of a backpacking or gap-year holidaymaker, it would be rather difficult for the Revenue to demonstrate that the principal private residence of individual concerned had changed from one address to another within the time spent abroad.

This might not be the case if the individual had set up some sort of permanent or semi-permanent accommodation abroad in the course of their travels, and if this accommodation was of such a nature that a reasonable person would conclude that the it had now replaced their Irish address as the person's "home" - for example an Irish person who decamps from Dublin to a holiday home in Alicante and remains there for a period of several months or a year without returning.

However, in practice I can't really think of any scenario see how this would affect backpackers or gap-year travellers. That is why I think that the person about whom this discussion was started should have no need to worry about their eligibility for either the stamp duty exemption or the rent-a-room scheme. That said, until and unless someone goes to the trouble of researching the legal issues (including the definition of 'principal private residence') in detail, they could not be 100% certain that my understanding would be correct. In the meantime, talk of "tax evasion" in cases like this is very wide of the mark as there is genuine doubt as to whether the law is being broken or not.

(By the way, unless they have other reasons to suspect tax evasion in specific cases, I couldn't imagine the Revenue getting hot and bothered about how a student, for example, could manage garner the funds to maintain themselves on a 12 or 15 month round the world trip, given the obvious fact that most people in that position supplement their funds by getting casual work along the way.)
 

Marie

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ubiquitous said:
(By the way, unless they have other reasons to suspect tax evasion in specific cases, I couldn't imagine the Revenue getting hot and bothered about how a student, for example, could manage garner the funds to maintain themselves on a 12 or 15 month round the world trip, given the obvious fact that most people in that position supplement their funds by getting casual work along the way.)
Or to push imagination even further, how any individual can engage in the substantial financial commitments around purchasing 'a home' and immediately leave for an unremunerated extended period abroad! We're talking serious wealth here, and not a penny-piece in taxes. I think this is what a number of posters are picking up.
 

Marie

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bb1 said:


It's rented to non-nationals and she knocked more than enough off the rent to cover their benefit if they claimed rent allowance.

I'm not saying I agree with what she did, but I can understand where she is coming from, it's not like she's this landlord with a big portfolio of houses, she's covering her mortgage payments and that's all. I just think Revenue could be more accommodating of circumstances like this, fair enough if a person has 2nd house, but other circumstances such as a recent poster who moved out because they couldn't afford the mortgage for a year it is understandable why they would chance this tax evasion tactic.
Then presumably yourself and your friend would not "mind" if in these circumstances additional deducations were made from your earnings for (a) roads (b) sewage treatment (b) transport infrastructure (c) policing (d) refuse collection and treatment (e) schools (f) everything else that goes into urban infrastructure?................because that's the purpose of taxation! Whether your friend is at home or abroad her property depends on and benefits from all of this.
 

ubiquitous

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Marie,
your comments above are predicated on the assumption that the case we are discussing involves tax evasion (ie illegitimate use of the rent-a-room scheme). For the reasons I set out above, it is extremely doubtful that this is the case, and it is indeed quite probable that the people who use the rent-a-room scheme to finance gap-year travel are acting fully within the spirit and the letter of the tax laws in doing so.

On that basis, I think it is a bit much to lecture bb1 on their friend's tax obligations. Nobody is obliged to pay any more tax than what the law compels them to pay. If some people are able to finance time off by making clever (but seemingly legitimate) use of a generous tax break such as the RAR scheme, then why the jealousy?
 

Marie

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Ubiquitous - Before your introduction of the allegation of "jealousy" against myself drags this thread towards farce, doldrums or closure it might be appropriate to return to the excerpt from ClubMan with which it began. The news item informs that "Revenue are clamping down on people who buy property, avail of the tax concessions applicable to a PPR and then "do not live there". The reasons why they do not live there are - I respectfully suggest - irrelevant!

The broad (non-jealous);) point I made is that taxes - including the taxes under discussion here - support urban and social infrastructure. They are not "optional". There can be no equitable system if some individuals or groups set out to circumvent contributing their reasonable share towards those systems. By so doing they overtly engineer the uptake of their responsibilities by others.

There are dozens of unique legitimate reasons - financial, domestic, personal, dispositional - why someone who buys a house to live in does not subsequently do so for a number of years. The taxation system is based on a clear divide between owner-occupiers and investors. There is no intermediate status and these two categories are mutually exclusive.

This debate appears to be between those who accept "the system" and bear their financial responsibilities as participants - however onerous - and those who feel that "the system" is for others and they themselves should be treated as exceptions. Take a young unmarried couple each of whom has bought "a PPR" in their own name, rent both out on the q.t. whilst they live in a rented appartment in - say - Dublin for 6 months of the year, spending the rest of the time in their Spanish villa (jointly purchased as a PPR) and let "informally" to friends and extended family the rest of the year. That is not behaviour to envy, rather to deplore!
 

ubiquitous

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The taxation system is based on a clear divide between owner-occupiers and investors. There is no intermediate status and these two categories are mutually exclusive.
Hi Marie
I would beg to differ with you on this. There are many scenarios and issues in relation to which our tax tax laws are not "black and white", mainly as a result of the fact that the law tends to be a mixture of legislation and judge-made law.

In the context of the specific scenario which we are discussing here, it is simply incorrect and misleading to say that "The taxation system is based on a clear divide between owner-occupiers and investors. There is no intermediate status and these two categories are mutually exclusive"

If you can back up this statement with appropriate legislative and case law references to support your argument, that would be great.
 

Marie

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ubiquitous said:
Hi Marie
I would beg to differ with you on this. There are many scenarios and issues in relation to which our tax tax laws are not "black and white", mainly as a result of the fact that the law tends to be a mixture of legislation and judge-made law.

In the context of the specific scenario which we are discussing here, it is simply incorrect and misleading to say that "The taxation system is based on a clear divide between owner-occupiers and investors.
HUH! Either a property is an individual's "principal private residence" or it is not! Either it is the buyer's home or it is not a "home" but "something else". There are two categories - owner-occupied OR investment.

Regarding my observation that the taxation system is based on a clear divide between owner-occupied and investment, the dogs in the street are barking this. The fact that some individuals blur the boundaries and provide themselves with fiscal and/or legal loopholes is neither here nor there. I have a number of friends and acquaintances in various parts of Europe including Ireland who play fast and loose and get support from solicitors and lawyers when things get sticky but that doesn't alter the fundamental structure.
 

stuart

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Marie said:
Regarding my observation that the taxation system is based on a clear divide between owner-occupied and investment, the dogs in the street are barking this.
Ubiquitous asked had you any factual reason to assert that this was the case. The Taxes Consolidation Act 1997, the last time I checked, has 1,518 pages in it

And I would not pretend to know it inside out but I am certain that the "dogs in the street" are not mentioned once as being able to make any rulings in relation to tax issues
 

eliza

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ubiquitous said:
Marie,
It is indeed quite probable that the people who use the rent-a-room scheme to finance gap-year travel are acting fully within the spirit and the letter of the tax laws in doing so.
I think ubiquitous is making a very important point here. Basically, unless the person on the gap-year actually establishes residence elsewhere, that person probably remains a resident of Ireland. However, it is a very complex area of law and is by no means 'black-and-white'.
 

ubiquitous

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Basically, unless the person on the gap-year actually establishes residence elsewhere, that person probably remains a resident of Ireland.
...and, by extension, of their own home.

However, it is a very complex area of law and is by no means 'black-and-white'.
exactly.
 

Marie

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The Revenue Commissioners are cracking down on buyers of new houses and apartments who do not pay stamp duty.

The officers are checking whether buyers are living in the properties. Owner-occupiers who buy a new property do not have to pay stamp duty, but they must continue to live in the property, otherwise they are regarded as investors.

Investors who avoid stamp duty, by claiming to be owner-occupiers and then renting out the property, could be hit with a double tax bill - the unpaid stamp duty plus tax due on any rent paid.


(originally posted by ClubMan)

I must have been dozing! Can someone clarify how the above quote connects with general complacency and agreement that students on gap-year travelling have not an established domicile outside the RoI?

As you say - there are thousands of pages.

As I say - there are two categories of ownership for taxation purposes; your residence (your "address") and all others are investment properties.

As half-a-dozen other posters say - an unknown but probably significantly large number of individuals are not paying appropriate taxes on properties they own which are lived in by others.

So let the great Irish public go on niggling about the equivalent of how many angels can dance on the head of a pin whilst ignoring social justice, the law of the land and requisite personal and busines ethics. Instead nail the occasional token politician for corruption.

Good news the Revenue is refining its detection systems.
 

ubiquitous

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Hi Marie

It is a mistake to treat the word of any newspaper (including the Sunday Business Post) as gospel when it comes to technical tax or law issues, simply because newspapers tend to take a simplistic interpretation of the law as it pertains to matters under discussion. The SBP may be reasonably accurate in saying that "owner-occupiers who buy a new property...must continue to live in the property, otherwise they are regarded as investors", however this interpretation is a long way from being 100% accurate - for a start, several explicit exceptions to this principle are explicitly noted in the Taxes Consolidation Acts.

If the Revenue and or the State criminal law enforcement agencies decide to punish someone for failure to comply with the Taxes Acts, they use the Taxes Acts ("the law of the land" which you evidently hold so dear) as the reference point in doing so - not a quick-fire summary of the law that appears in some news article.

By the way, you cite the issue of social justice. Where is the social justice in a young person, who has been enterprising and self-reliant enough to buy their own property, being subjected to huge tax and stamp duty penalties for having the audacity to travel around the world for 6 months or so? Do you really think that the Dept of Finance would have framed the law in order to punish these youngsters in this way - effectively prohibiting them from seeing the world and having a bit of harmless fun before they settle down? Unless we are back in the era of John Charles McQuaid, I cannot imagine that they would have done so.
 
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