Stamp Duty Obligations

1103

The question of stamp duty received a lot of attention in the national press after Paschal Donohoe’s first budget on 10 October 2017.  It was in fact one of the topics that generated the most publicity and perhaps the most controversy.  The reason for this is that the budget introduced significant changes to the stamp duty rate on non-residential property.
In order to understand the publicity, it is important to understand what stamp duty means in the first instance.

Stamp Duty
Stamp duty is a tax payable on the sale or transfer by way of gift of property.  For the purposes of this article I am focusing on real property only for example houses, sites and farms.  Prior to budget day the stamp duty rates payable on real property were divided as between residential property and non-residential property.  The stamp duty rate for residential property was 1% and the stamp duty rate for non-residential property was 2%.

Non-Residential property
Significant changes however were introduced on budget day to the stamp duty rate for non-residential property increasing the rate from 2% to 6% with effect from midnight on budget day.  The definition of non-residential property includes farmland.  This significant increase from 2%to 6% generated a number of queries from people asking…
1. Whether transitional arrangements would apply to contracts signed but not completed before budget day?
2.  Whether the 6% rate applies totransfers of agricultural land?
Finance Bill
These particular queries are now dealt with in the Finance Billas published.Section 55 of the Finance Billaddresses these issues:
The 2% rate of stamp duty will be applied to binding contracts entered into before 11 October 2017 provided the instrument (deed) for the transfer is executed before the 1 January 2018. Evidence must be provided that a binding contract was entered into before 11 October 2017 to avail of this transitional arrangement

The 6% rate will apply to agricultural land however a form of relief has been introduced where the transfer of agricultural land is between relatives otherwise referred to as consanguinity relief. The Finance Bill sets out that the stamp duty rate becomes a fixed 1% rate applying to the transfer of land between relatives until 1 January 2021. In addition the upper age limit of 67 for the transfer is being abolished. This change will come into effect on the enactment of the Finance Act.

Know your stamp duty obligations before you purchase/transfer!