who were first-time buyers in 2007 (from the end of March of that year) paid no stamp duty on the property purchase. After the crash in 2007/8, many of these buyers were left with no choice but to rent the property because of loss of employment, salary reductions and so on. Some had to downsize, some to move back to the family home, some to emigrate. If this happened within five years of the purchase, a potential liability to stamp duty may have been inadvertently and unknowingly created. It is likely that most people in this position still are not aware of this. What attitude is the Revenue Commissioners taking to this problem and what should anyone affected by this do to get clarification? Tom, Naas, Co Kildare THE Revenue Commissioners have not issued any guidance on this matter nor given any indication that they are applying any concessionary treatment. The legislation drafted at that time remains in place and where a clawback arises, the stamp duty is payable. Interest and penalties also arise from the date on which the stamp duty should have been repaid.
The stamp-duty regime in place at the time was quite complex and has since undergone further changes. Where relief from stamp duty was claimed, it is therefore important to review the circumstances of each particular case in order to establish if any clawback arises.
The first-time buyer exemption applied to purchases of residential properties made by first-time buyers between March 31, 2007 and December 8, 2010. The relief applied to purchases of residential property by first-time buyers for use as their main residence.
Originally, the relief was subject to a clawback where rental income was subsequently derived from the property within five years of its acquisition. This was subsequently amended so that the clawback period was reduced to two years where the property was rented for the first time after December 5, 2007. In retrospect, and in light of the impact of the economic crash in or around that time, this was a significant amendment and most likely greatly reduced the number of transactions that would have given rise to a clawback.
While the economic crash led to a change in circumstances for many of these first-time buyers, the clawback only arose in specific cases. One notable exception is where the rental income derived qualified for ‘rent-a-room relief ’ — where the homeowner rented out a room or rooms in the property while continuing to reside there themselves and the total rent receivable was less than €10,000 per annum at that time. The clawback does not apply in such cases.
Ceasing to use the property as their residence did not in itself give rise to a clawback for homeowners either, provided no rental income was derived from it. Also where the property was sold, this in itself does not give rise to a clawback — even when the sale took place before the end of the clawback period.
However, it should be noted that where a clawback arose the entire stamp duty was repayable — regardless of the period of time that had elapsed before the clawback event occurred.
At the time the first-time buyers exemption referred to above was introduced, there was already a separate relief in place for a number of years for newly built properties. This relief also continued to apply until December 8, 2010. Broadly, this relief exempted most newly-built residential properties from stamp duty where they were acquired for use as the purchaser’s main residence.
As with the first-time buyers exemption, a clawback of the relief applied where rental income was derived from the property. Similar considerations therefore apply to cases where this relief was claimed as apply to the cases above. While we will endeavour to place your questions with the most appropriate expert for your query, this column is not intended to replace professional advice.