Stamp Duty Query

R

rob32

Guest
Hi all, first post so go easy on me!

I want to buy a new build apartment. It is under 125m and is brand new so I do not need to pay Stamp Duty.

However, I am buying it with my father because I need him to get the full amount of mortgage. He will have no interest on the property but will have to be on the deeds as the bank wouldn't give me the money otherwise. It will be my primary residence but not his.

Should I be paying stamp duty on it?
 
Rob, As its your father, why don't you get the mortgage in your name and have your father become guarantor on the mortgage, to a specific limit. Could be the easiest and simplest way to purchase the property, especially if either of you have any kind of a credible track record with the Bank.
 
A guarantor can only go on someone's first house I think, is this your first?
 
Hi there,

I have a query about stamp duty. I'm sure this has been answered before so I apologise if I am repeating things, but I can't seem to find any information on this anywhere!

As a first time buyer how is stamp duty calculated on a second-hand property that measures 126square metres and above the 125square metre threshold on which first time buyers are exempt. Does the extra 1 square metre mean that you have to pay the standard 7% stamp duty fee on the entire price of the property over €125,000?

Any advice on this would be greatly appreciated.
 
rob32 said:
Hi all, first post so go easy on me!

I want to buy a new build apartment. It is under 125m and is brand new so I do not need to pay Stamp Duty.

However, I am buying it with my father because I need him to get the full amount of mortgage. He will have no interest on the property but will have to be on the deeds as the bank wouldn't give me the money otherwise. It will be my primary residence but not his.

Should I be paying stamp duty on it?
Click to expand...

If his name is on the deeds, then you will have to pay SD. If his name isn't on the deeds, you won't have to pay SD.

From revenue.ie

What is the position where the purchase monies are not provided entirely by the first time buyer?

To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer.

The basis for this treatment is that, in such circumstances, the house is held for the person providing the monies used in the purchase of the house by way of a resulting trust presumed in favour of that person. This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.

Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:

The transfer of the house is taken in the name of the child.
It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course.

Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan.
Click to expand...
 
The guarantor element for the loan will only relate to the finance matter with a lending institution. As it is intended to be a short term arrangement your father will not have a life time interest in the property or the finance/mortgage.
 
There is no stamp duty payable as it is a new property and will be used by one or more of the purchasers as their principal place of residence.
 
FKH said:
There is no stamp duty payable as it is a new property and will be used by one or more of the purchasers as their principal place of residence.
Click to expand...

FKH - that is wrong. If you read the original post and some of the very good replies ( particularly plant43) you will see the difficulty. If the father is on the deeds, stamp duty at the full rate will be payable. If the father is joined in the mortgage only, OP can benefit as FTB .

mf
 
There is no stamp duty payable on new properties for owner occupiers. The Revenue Certificate for new property for owner occupieers is:

“It is hereby certified that
(a) this instrument gives effect to the purchase of a dwellinghouse/apartment on the erection of that dwellinghouse/apartment,

(b) on the date of execution of this instrument, there exists a valid floor area compliance certificate (within the meaning of section 91A(1)(a) of the Stamp Duties Consolidation Act 1999) in respect of the said dwellinghouse/ apartment, and

[FONT=&quot](c) the purchaser/one or more of the purchasers/a person or persons in right of the purchaser/a person or persons in right of one or more of the purchasers will occupy the dwellinghouse/apartment as his/her/their only or principal place of residence for the period specified in section 91A(4)(b) (new dwellinghouse/ apartment with floor area compliance certificate) of the Stamp Duties Consolidation Act 1999, and that no person (other than a person who, while in such occupation, derives rent or payment in the nature of rent in consideration for the provision, on or after 1 April 2004, of furnished residential accommodation in part of the dwellinghouse/apartment concerned or other than by virtue of a title prior to that of the purchaser) will derive any rent or payment in the nature of rent for the use of the dwellinghouse/apartment or any part of it during that period.”


My reading (andthat of the people I've spoken to in the Revenue)of the legislation is that the purchasers are classed as owner occupiers for Stamp Duty purposes. If the property were second hand there would be stamp duty payable but there is no stamp duty for owner occupiers of new propeties under 125 sq.m.
[/FONT]
 
OPs post

"However, I am buying it with my father because I need him to get the full amount of mortgage. He will have no interest on the property but will have to be on the deeds as the bank wouldn't give me the money otherwise. It will be my primary residence but not his."

From Revenue

"Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:

The transfer of the house is taken in the name of the child.
It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course."

The problem lies with the father being on the deeds. OP will not get the preferential FTB stamp duty exemption- all parties to the Deed would have to be FTB's. If father is on the deeds, they'll pay investor rates. If father is on the mortgage only and complies with the guidelines, there is no issue.

mf
 
Apropos of mf1's posts see also these Revenue press releases:

[broken link removed]
[broken link removed]
 
I have spoken to the Revenue about this and have been told by them that if one of the purchasers lives in the property then the deed can be stamped as owner occupiers (Not as first time buyers). They pointed out to me that it is based on a person using it as their principal residence and not deriving rent from it. It could be that the individual in the Revenue is wrong.
 
I can actually see your point now apropos the old "person in right of the purchaser" certification ( now gone as a result of the Budget changes) but I never worked out what Revenue would class as a "person in right of the purchaser" and all of the Revenue guidelines re. FTB's were very clear about all names on the Deeds having to be FTB's.

I remember when second homes ( holiday homes) were brought into the stamp duty net as "investment " properties even though rent might never be received.

Another major issue though will be CGT when the property is sold. Presumably, an owner but not an occupier would have a full CGT liability on their share.

mf
 
The CGT could be an issue on the father's share when the property is sold. The son's share would be his principal private residence so would be exempt and the revenue might not notice the other half!
 
As regards CGT - its self assessment so while they (owners) might choose to ignore it, in reality, if ever........And then there will be penalties and interest.

With issues like this, I always take the view that I can only advise my clients what they should do to be completely compliant but its up to themselves to decide what they want to do. If they choose to ignore my advice - so be it - so long as they don't then feel I should have a responsibility for their choosing not to take my advice.

mf
 
Exactly, fortunately it is up to the client themselves to pay CGT to the Revenue so I consider my job done once they have been advised of this in writing. After that I don't really mind what they do.

In relation to stamp duty on the OP's property do we think that he will not be charged as the property is new and under 125sq.m.? I think that he might still be ok as revenue have said that the owner occupier regieme for new builds under 125sq.m. is unchanged by the budget.
 
FKH is quite right about the stamp duty issue - no stamp duty applies to owner-occupiers of new builds which do not exceed 125 sq. m. in floor area and for which a Floor Area Compliance Certificate has issued from the Dept of the Environment.
They do not need to be first time purchasers and if they are first- time purchasers they do not need to claim first time purchaser relief - owner-occupier status is enough to claim the exemption under section 91 of the Stamp Duties Consolidation Act 1999 for builds as per above.
 
You must log in or register to reply here.
Back
Top