Stamp duty is a tax on documents and most peoples experience with stamp duty will be in relation to property purchase which gives rise to the notion that stamp duty is applied to property.
But it is actually a tax on the instrument which witnesses the property transaction and you will also see stamp duty applied to other instruments (legal documents) such as shares in companies.
The Stamp Duties Consolidation act 1999 governs this whole area and in that legislation there is a Schedule 1 which sets out the heads of charge for stamp duty which stipulates that the stamp duty on a conveyance or transfer of property will range from 0% to 9%. Each year the government in the Finance Act may change the rate of duty in various heads of charge but the duty will be calculated on an “ad valorem” (for value) rate.
Generally stamp duty will be payable if the document/instrument is executed in Ireland or if the transaction relates to property in the State. You used to have 30 days within which to stamp your document/instrument with the Revenue Commissioners; this is now 44 days and you can do the stamping online with the new online stamping service provided by the Revenue Commissioners called eStamping with the purchaser being the liable person for the duty.
However if it is a voluntary transfer, such as a gift, both parties will be jointly and severally liable.
Residential Stamp Duty Rates
The rates of duty applicable for residential property (whether new or second-hand) are as follows:
First €125,000 Nil
Next €875,000 7%
Excess over €1,000,000 9%
* Transactions, where the consideration (or the aggregate consideration) does not exceed €127,000, are exempt from stamp duty.
Stamp Duty Rates On Non Residential Property
Up to €10,000 Exempt
€10,001 to €20,000 1%
€20,001 to €30,000 2%
€30,001 to €40,000 3%
€40,001 to €70,000 4%
€70,001 to €80,000 5%
Over €80,000 6%
These rates are applicable from February, 2010.
How much stamp duty you will have to pay will depend on whether you are considered to be a first time buyer, owner occupier or investor.
First time buyers do not have to pay stamp duty on either new or second hand houses but there is a clawback of duty if the first time buyer or owner occupier lets all or part of the property other than under the Rent A Room scheme.
This rent a room relief is not available to investors.
Stamp Duty On New Homes
Investors pay full duty on new homes; first time buyers are exempt. Owner occupiers may qualify for relief from stamp duty if there is a Floor Area Compliance Certificated for the property and whether the house is completed or if it is the sale of a site and contract to build a new house.
Conveyance Combined With Building Agreement
Owner occupiers will pay duty on either 25% of the total price excluding vat or the price of the site(excluding vat), whichever is the higher.
No stamp duty is payable on contents although they are taken into consideration when apportioning the total price paid.
Stamp Duty on Leases
Stamp duty is payable on leases and is divided between any premium payable which is calculated at normal stamp duty rates and duty payable on the rent.
Residential and Non-Residential Property
The stamp duty on the premium or fine is the normal rate for residential or non residential as appropriate.
Lease for a term not exceeding 35 years or for any indefinite term-Rate: 1% of the average annual rent
Lease for a term exceeding 35 years but not exceeding 100 years-Rate: 6% of the average annual rent
Lease for a term exceeding 100 years-Rate 12% of the average annual rent
Transfers Between Spouses
Transfers between spouses are exempt from stamp duty.
Stamp Duty Reliefs
Consanguinity Relief
This relief applies to transfers between blood relations such as transfers from parent to child, grandchild, grandparent, brother, sister and some others. The relief provides for payment of 50% of the normal stamp duty that would have applied had there been no relationship.
Young Trained Farmer
There is no stamp duty on a transfer of qualifying land to young trained farmers.
Site Transfer From Parent To Child
When a parent transfers a site to a child for the purposes of building a private residence, and the value of the site is less than 500,000 euros, then there is no stamp duty.The size of the site can not be greater than 1 acre.
Farm Consolidation Relief
There is considerable relief in relation to the transfer of farms to encourage the consolidation of farms and the best place to investigate this scheme is the farm advisory body, Teagasc.
Charities And Sporting Bodies
Charities and sporting bodies both enjoy relief from paying stamp duty when acquiring property; both the charities and sporting bodies need to be approved and further enquiries should be made from the Stamp duty section of Revenue Commissioners for further information.
Gifts/Voluntary Transfers
Bear in mind that if the transfer is a voluntary transaction, that is a gift, the stamp duty will be calculated on the market value of the property at the date of transfer.
If you are thinking about buying or selling a house and want a professional, competitive, personal service, we would be delighted to hear from you.
UPDATE 2013
A much simplified stamp duty system was introduced in Ireland in 2010 with many of the exemptions and reliefs outlined above being abolished.
The stamp duty rates in Ireland are as follows:
Residential Property
Up to €1,000,000-the rate is 1%
Excess over €1,000,000-the rate is 2%
There are also reliefs in relation to transfers between spouses, civil partners, and cohabitants.
Non Residential Property
The rate was 2% until the budget announced in October, 2017 which saw an increase in stamp duty on commercial property increasing to 6%.
Stamp duty 2020
From October 2019 the stamp duty rate on non-residential is 7.5% (this rate applies to instruments (written documents) executed on or after 9 October 2019.)
Stamp duty exemptions and reliefs
There are many instruments (documents) exempt from stamp duty. There are also some reliefs from stamp duty.
Exemptions
The most important exemptions I encounter on a weekly basis are:
- Transfers between spouses
- Transfer between former spouses (now divorced) pursuant to an Irish court order on the dissolution of a marriage
Reliefs
The most common and important reliefs I encounter are
- Transfer of a site from parent to child if it is for the construction of the child’s principal private residence and the market value of the site does not exceed €500,000. The area of land cannot exceed one acre to qualify for this relief. There is some clawback of the stamp duty available, if the child builds the house on the site.
- Farm consolidation relief, subject to certain conditions
- Land acquired by approved sporting bodies
- Family farm transfer from a child to a parent
- Transfers for charities
Stamp duty reliefs for farmers
There are four important stamp duty reliefs for farmers:
- Consanguinity relief
- Farm consolidation relief
- Relief for leases of farmland
- Young trained farmer relief
Consanguinity relief
If you are the transferee you must be related to the transferor and farm the land for at least 6 tears or lease it to someone who will farm it.
If you are farming you must
- be registered for income tax
- hold a specified farming qualification or obtain one within 4 years from the date of transfer of the land or
- spend at least 50% of your time farming land.
If you lease the land the lessee must
- hold a specified farming qualification or obtain one within 4 years from the date of transfer of land to you or
- spend at least 50% of their time farming land, including the land leased.
Young trained farmer relief
You must
- be under the age of 35 years at the date of transfer of the land
- hold a relevant agricultural qualification, or obtain one within 3 years from the date of acquisition of the land
- have submitted a business plan to Teagasc
- be registered for income tax
- be the head of the farm holding
Also, you must
- spend at least 50% of your normal working time farming the transferred land and
- retain ownership of the transferred land
Relief for leases of farmland
To qualify for this relief you must
- hold a specified qualification or obtain one within 4 years from the date of the lease or
- spend at least 50% of your time farming land, including the land leased
The lease must be for a period of at least 6 years and cannot exceed 35 years.
This relief is an EU aid and there are restrictions on the amount of relief that may be claimed.
Farm consolidation relief
To qualify for this relief you must be a farmer who spends 50% or more of your normal working time farming.
If you are purchasing as a joint owner only one of you must be a farmer.
You must
- sell land and buy other land to consolidate your holding within 24 month
- and have a consolidation certified issued by Teagasc
You must also intend to
- retain ownership of the land and
- use the land for farming for at least 5 years from the date you claim the relief
The documents carrying out the sale and purchase must be signed after 1st January 2018 and before 31st December 2025.
You pay stamp duty on the difference between the price for which you sold land and the price which you paid to buy other land.