Stamp duty on property

Stamp duty is charged on the instruments used in the transfer of property – in other words, the conveyance documents that transfer the ownership of the property.

Residential property
Budget 2011 changed the rules on stamp duty on residential property (such as houses, apartments etc.). These changes took effect in respect of instruments executed on or after 8 December 2010. The rates were reduced and all existing reliefs and exemptions were abolished.

For people who entered into a binding contract to purchase a residential property before 8 December 2010, there is a transitional provision to ensure that they do not lose out if they execute the transfer of that property before 1 July 2011 – see ‘Transitional provision’ below.

Non-residential property
Stamp duty is also payable on land/housing sites without residential buildings. Where your agreement to buy a site is linked to a construction contract, stamp duty may be payable on the full amount of the site plus the construction contract.

Residential property: on or after 8 December 2010

From 8 December 2010 onwards, the only factor affecting the amount of stamp duty is the value of the property.

New rates
For properties valued up to €1 million, the new rate is 1% of the full value. For properties valued over €1 million, the rate of 1% applies to the first €1 million and a rate of 2% applies to the balance. The new rates apply to instruments of transfer dated on or after 8 December 2010.

Abolition of exemptions and reliefs
All existing reliefs and exemptions for stamp duty on residential property were abolished in respect of instruments executed on or after 8 December 2010, as follows:

First-time buyer relief
Exemption for new houses up to 125 sq m in size
Relief on new houses over 125 sq m in size
Consanguinity relief for residential property transfers
Exemption for residential property transfers valued under €127,000
Site to child relief
This means that many transactions which would have qualified for exemptions or reliefs under the old system will not now qualify.

However, if you were in the process of buying a property on 8 December 2010, and you would be disadvantaged if the new rules were applied, you may be able to avail of a transitional provision, which allows the old rules to apply for your benefit.

Transitional provision
A transitional provision will ensure that anyone who entered into a binding contract to purchase a residential property before 8 December 2010, and who executes the transfer of that property before 1 July 2011, will not lose out. In order to benefit from this provision, you must ensure that the instrument contains the following certificate:

“It is hereby certified that this instrument was executed solely in pursuance of a binding contract entered into prior to 8 December 2010”.

More details on the Budget changes are available in the leaflet published by the Revenue Commissioners.

Residential property: before 8 December 2010

Prior to Budget 2011, the amount of stamp duty payable varied according to the value of the property (home or apartment, land or housing site) and your status (first-time buyer, investor, etc.). Stamp duty was divided up into different categories and rates and the amount you had to pay depended on:

Whether, as an owner-occupier, you were a first time buyer
Whether you were an owner-occupier or an investor
Whether it was a new or second-hand house or apartment
The size of the house or apartment.
Whether there was a relationship or association between the vendor and purchaser
The price of the property
Whether your parent(s) transferred a site to you
First-time buyer exemption
Up to 8 December 2010, first-time buyers who were owner-occupiers of new and second-hand residential property did not pay stamp duty. Budget 2011 abolished this exemption with effect from 8 December 2010 in respect of intruments dated on or after this date.

A first-time buyer is defined as a person (or where there is more than one buyer, each person):

Who has not on any previous occasion, either individually or jointly, purchased or built on his or her own behalf a house in Ireland or abroad
Where the property purchased is occupied by the purchaser (or a person on his or her behalf) as his or her only or principal place of residence
Where no rent (except under the Rent a Room Scheme) is derived from the property for up to 2 years after completion of the purchase (for instruments dated on or after 5 December 2007) – see ‘Clawback of stamp duty relief’ below.
As a divorced or separated person, you could be considered a first-time buyer if you met the following conditions:

It was the first house purchased by you following the separation or divorce
You had left your former marital home
You did not retain any interest in the marital home
Immediately prior to the date of the judicial separation, deed of separation, decree of divorce or decree of nullity you were not entitled to an interest in a house other than the marital home
At the date of the judicial separation, deed of separation, decree of divorce or decree of nullity, your separated or former spouse must be living in the house which was occupied by you both before your separation or divorce.
Non-owner-occupiers and investors
People who rent out new or second-hand houses or apartments are considered investors. Under the rules in force up to 8 December 2010, the same rates of stamp duty applied to investors as to non-first-time owner-occupiers – see ‘Rates’ below.

As the relief for first-time buyers has now been abolished, all buyers now pay the same rates, based only on the value of the property being bought.

Exemption for new houses up to 125 sq m in size
Prior to Budget 2011, owner-occupiers of new houses/apartments were exempt from stamp duty, provided that the area of the house or apartment did not exceed 125 sq. metres (1,346 sq. feet) and a Floor Area Compliance Certificate had been issued. The house or apartment must not have been occupied prior to its purchase. It had to be occupied as the owner’s main place of residence for a certain period from the date of the purchase deed – i.e. you could not derive rent from the property other than under the ‘Rent a Room’ scheme. This period was originally 5 years but was reduced to 2 years on 5 December 2007. However, if you sold the house during this period you did not have to pay stamp duty. Budget 2011 abolished this exemption with effect from 8 December 2010.

Relief on new houses over 125 sq m in size
If the area of the house or apartment was greater than 125 sq. metres (1,346 sq. feet), some stamp duty was payable if the Chargeable Consideration was above the relevant exemption threshold. The stamp duty was assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever was the greater figure, depending on the contractual arrangements given effect by the deed of transfer. This figure was called the Chargeable Consideration. Budget 2011 abolished this relief with effect from 8 December 2010.

Transfer of property between related parties
Up to 8 December 2010, stamp duty was payable at half the normal rate applicable if there was a transfer of property (other than shares) to certain relatives (for example, a parent, grandparent, step-parent, child, brother, sister, half-brother, half-sister, aunt, uncle, niece or nephew). This relief was not available on leases or on transactions involving cousins and/or in-laws.

Budget 2011 abolished this consanguinity relief with effect from 8 December 2010, but only as it applied to residential property. It continues to apply to non-residential property.

Exemption for properties under €127,500
Up to 8 December 2010, you did not have to pay stamp duty when buying a property for less than €127,500. Budget 2011 abolished this exemption with effect from 8 December 2010.

Site transfers from parent to child
Up to 8 December 2010, stamp duty did not apply where a parent transferred a site to a child.

The site had to be for the construction of the child’s principal private residence and the market value of the site could not be greater than €500,000 for disposals made on or after 5 December 2007.
A parent could only transfer one site to each child to take advantage of this exemption.
The area of the site had to be less than 1 acre (0.4047 hectare), exclusive of the area occupied by the house itself.
Budget 2011 abolished this exemption, known as site to child exemption, with effect from 8 December 2010.

Other rules

Clawback of stamp duty relief
A stamp duty clawback arises where rent, other than under the ‘Rent a Room scheme’ is obtained within the 2-year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of getting the benefit of the reduced stamp duty rates.

For purchase deeds dated before 5 December 2007 the clawback period was 5 years. Where a property was purchased before 5 December 2007 but was rented on or after that date, there is no clawback of stamp duty relief if it is rented in the 3rd, 4th or 5th year of ownership.

Under the ‘Rent a Room scheme’, there is no stamp duty clawback where rent is received by the person in occupation of the house or apartment on or after 6th April, 2001 for letting of furnished accommodation in part of the house.

Farm consolidation relief
There is a special stamp duty relief for farmers who sell some agricultural land and purchase more agricultural land in order to consolidate their holdings and improve the viability of their farms. The current scheme applies to instruments executed between 1 July 2007 and 30 June 2011.

Full details, including the qualifying conditions, are set out in Revenue’s Stamp Duty Farm Consolidation Relief (pdf) leaflet.

Rates

From 8 December 2010
The following rates of stamp duty apply to all residential property:

On and after 8 December 2010
Property value Rate
Up to €1,000,000 1%
Balance 2%
Transitional arrangements ensure that anyone who entered into a binding contract to purchase a residential property before 8 December 2010, and who executes the transfer of that property before 1 July 2011, will not lose out.

Before 8 December 2010
Up to 8 December 2010, stamp duty rates were as follows (subject to the relevant reliefs and exemptions):

Property value Rate
Up to €125,000 Exempt
Next €875,000 7%
Balance 9%

Non-residential property
Rates of stamp duty on land/housing sites without residential buildings have not changed:

Property value

Rate
Up to €10,000 Exempt
€10,001 – €20,000 1%
€20,001 – €30,000 2%
€30,001 – €40,000 3%
€40,001 – €70,000 4%
€70,001 – €80,000 5%
Over €80,000 6%

How to apply

Your solicitor will calculate how much stamp duty is due and request this from you prior to the closing of the sale. The amount is paid to the Revenue Commissioners who place a stamp on the property deeds. Without this stamp, the deeds cannot be registered.

Where to apply

National Stamp Duty Office
New Stamping Building
Dublin Castle
Dublin 2
Ireland
Locall:1890 482582
Homepage: http://www.revenue.ie
Email: dublinstamp@revenue.ie