What is Stamp Duty?
Stamp duty is a tax payable on property that is paid when-
- You buy property or property is transferred into your name by other means.
- You exchange, surrender, release or partition property.
When property is transferred to you
The document that transfers the property into your name is called the Deed of Transfer. It will include the names of each party, the address of the property and the price being paid from the purchaser to the vendor. This Deed will be lodged in the appropriate Government office so that your ownership of the property can be formally registered. Before your solicitor can lodge the Deed, it will have to be stamped with the Revenue Commissioners.
The stamp duty must be paid within 44 days of the date that the sale completes as this is the day on which the Deed is signed. If the stamp duty is not paid within that time then serious penalties will be applied so your solicitor will want to get the Deed stamped immediately. In practice, your solicitor will ask for the stamp duty monies to be lodged with them together with the purchase monies.
The amount of stamp duty that you pay on the transfer depends on a few things.
Firstly, the rate will differ if you’re buying residential or commercial property.
If you’re buying a residential property, stamp duty is payable at a rate of 1% of the purchase price up to €1 million. If the purchase price exceeds €1 million, you pay stamp duty at a rate of 2% on any excess.
If you’re buying a commercial property the rate is 6% regardless of the purchase price in question.
If you’re buying a property that is part residential and part commercial, different rates will apply to each portion. You’ll have to get a valuation for the residential and commercial parts separately. Each part will be liable to stamp duty on the rates set out above.
What is “Residential Property”?
Residential property is any property that is used or capable of being used as a dwellinghouse. It includes a property that was built with the intention of being used in that way but is not currently being used as such. It includes a property that is in the process of being built as a dwelling. The definition also includes curtilage of up to 1 acre. “Curtilage” can mean the garden, paths, shed or driveway used in conjunction with the property. If the curtilage exceeds 1 acre then the property is no longer deemed to be residential but instead falls under the heading of “commercial” for the purposes of the stamp duty rates.
Stamp duty is also payable if you’re not paying anything for the house or property in question. So if property is being transferred to you by a relative for what’s called “natural love and affection” rather than a sum of money, the Deed of Transfer will still have to be stamped by the Revenue. In those cases, the rate is calculated on the basis of a valuation of the property as prepared by an estate agent or other independent valuer.
You must also pay stamp duty on a property if you pay some money towards the transfer but do not pay the full value.
How is the stamp duty paid?
Your solicitor will arrange for the stamp duty to be paid immediately following the completion of your purchase. This used to be done by having the physical deed stamped in the offices of the Revenue Commissioners but a new online system was recently introduced and this means that the monies can be paid online. Once it has been paid your solicitor will be able to download a certificate confirming payment. This certificate is then attached to the Deed of Transfer and the Deed is lodged in the relevant Government office (either the Registry of Deeds of the Property Registration Authority of Ireland, depending on the type of property involved), so that you can be registered as the legal owner of the property.
Are there any exemptions from stamp duty?
In the past, there were a number of situations where there was no requirement to pay stamp duty. These included consanguinity relief, where the property was being transferred between family members eg from parent to child. Another common relief was first-time buyers’ relief which meant that there were certain exemptions for people buying their first property.
Those reliefs have now been abolished although there are still some exemptions, primarily relating to agricultural land.
There is no stamp duty for the transfer of property between spouses unless the transfer is a sub-sale as part of a larger sale. In those cases, further advice from your solicitor would be required in order to determine the amount of stamp duty payable.
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