Budget

Finance Bill - Stamp duty

Budget 2018 concentrated on initiatives to address the issues in the housing market and consequently taxation measures that targeted the property market were prevalent. There were measures introduced across a variety of tax heads with stamp duty taking pride of place with the most significant changes. 

1. Non-Residential Property Rate

The rate of stamp duty for instruments transferring non-residential property has increased from a 2% to 6% where those instruments are executed on or after 11 October 2017. Please read to end to get comments on transitional measures in respect of real property.  

There is no definition of non-residential property in the legislation but it incorporates all “property” that is not residential property (i.e. is not capable of immediate residence by a person). It should be noted that it extends beyond just real property (e.g. goodwill, farmland, debt etc.).                  

In relation to the transfer of real property it is in fact the conveyance rather than the contract that is the chargeable instrument for stamp duty with the rate of stamp duty in force at the date of execution of the conveyance that is relevant for ascertaining the applicable rate of stamp duty. The impact of the change is that a conveyance or contract transferring non-residential property executed on or after 11 October 2017 is now subject to stamp duty at a rate of 6%. 

Due to the lack of clarity around transitional measures in Minister Donohue’s Budget speech there was a flurry of activity in many conveyancing departments across the country on Budget night.

Transitional measures were announced in the Finance Bill 2017, published October 19, 2017 that have given a short window to complete transfers to avail of the pre-Budget rate of 2%   The provision states that where there were binding contracts in place on 10 October 2017, then the 2% rate can be availed of provided the conveyance or transfer is completed prior to 31 December 2017.  The instrument must contain a statement (in a form yet to be prescribed by Revenue) to this effect.  Any statements furnished that are incorrect will be a Revenue offence under Section 1078 TCA 1997. 

It is important to note the two month time frame within which to complete a formal transfer of property and it is advised that clients seeking to rely on this transitional measure speaks to their professional adviser immediately. 

2. Stamp Duty Refund Scheme

Commercial land purchased for the development of housing will be eligible for a stamp duty refund. 

The refund will be subject to certain conditions, including a requirement that the “relevant development” is commenced within 30 months of the land acquisition. The exact details of this refund scheme, particularly the requisite qualifying conditions were not announced in the Finance Bill but will instead be included in Committee Stage Amendments and we will provide a detailed update at that time.

Please contact our in-house stamp duty expert, Amanda-Jayne Comyn for further details.