By Audrey Healy, Partner, Property Department
By Holmes O’Malley Sexton LLP on February 21st, 2011
Two rates of Stamp Duty now apply to Instruments/Deeds of Transfer/Conveyances/Assignments of Residential Property executed on or after the 8th of December 2010. The previous exempt threshold of €127,000 has been abolished. A new lower rate of 1% now applies where the purchase price does not exceed €1 million. A higher rate of 2% will apply to the excess of the price over €1 million.
In the case of a mixed property (residential and commercial) the consideration must be apportioned on a just and reasonable basis between the residential and the non residential elements of the property. Significant penalties/surcharges can apply if the apportionment is not just and reasonable.
Various reliefs and exemptions have been abolished with effect from the 8th of December 2010. They comprise the following:
· The exemption that applied where a site was transferred by a parent to a child for the purpose of building a house for occupation by the child.
· The exemption that applied to the purchase by an owner/occupier of a new house or apartment where the floor area did not exceed 125 square metres.
· The relief that applied to the purchase by an owner/occupier of a new house or apartment where the floor area exceeded 125 square meters.
· The exemption that applied to a first time purchaser who acquired a house or apartment for owner occupancy.
· Consanguinity relief will no longer apply to residential property but will continue to apply to non residential property.
In all other respects Stamp Duty stays the same. No changes were made to the Stamp Duty rates for non-residential property which includes sites purchased for the purpose of building a house thereon.
Transitional arrangements apply where, as a result of the new rates or the termination of the reliefs or exemptions, a tax payer is disadvantaged compared to the Stamp Duty treatment applicable prior to the 8th of December 2010. Where an Instrument or Deed is executed on or after the 8th of December 2010 and before the 1st of July 2011 solely in pursuance of a binding Contract which had been entered into prior to the 8th of December 2010 the more favourable Stamp Duty rates and/or reliefs and exemptions will apply.