Rev­enue clar­i­fies com­mer­cial prop­erty stamp duty moves

Mea­sures out­lined for availing of lower rate on deals agreed be­fore Oc­to­ber 11th De­ci­sion to triple rate of stamp duty was made in Bud­get 2018

The Irish Times - - Business + Your Money - FIONA REDDAN

The Rev­enue Com­mis­sion­ers has clar­i­fied how com­mer­cial prop­erty buy­ers who agreed to buy a prop­erty be­fore Oc­to­ber 11th can avail of the old lower rate of stamp duty.

Bud­get 2018 in­tro­duced a new, higher rate of stamp duty of 6 per cent; and, as noted in the Fi­nance Bill 2017, pub­lished on Oc­to­ber 19th, this new rate ap­plies from the date of the bud­get, Oc­to­ber 11th. How­ever, for trans­ac­tions where a con­tract was in place be­fore this date, the lower rate of 2 per cent will ap­ply pro­vided that it is ex­e­cuted be­fore Jan­uary 1st, 2018.

Now those qual­i­fy­ing for the lower rate, be­cause their prop­erty ac­qui­si­tion had reached an ad­vanced stage be­fore the bud­get, can en­sure they avail of this rate in one of two ways.

Firstly, the buyer can file a re­turn through the e-stamp­ing sys­tem, pay stamp duty at the rate of 6 per cent and be is­sued with a stamp cer­tifi­cate. Once the Fi­nance Bill is en­acted – likely to be in De­cem­ber – the filer can then re­quest a re­fund of the dif­fer­ence in the stamp duty paid be­tween the 2 per cent and 6 per cent rates by amend­ing the re­turn and sub­mit­ting the rel­e­vant doc­u­men­ta­tion to Rev­enue.

Al­ter­na­tively, buy­ers can avoid the higher rate al­to­gether by fil­ing their re­turn and pay­ing stamp duty at the rate of 2 per cent. While this means that they won’t be en­ti­tled to their stamp cer­tifi­cate, they should be able to get this in due course, as once the Fi­nance Bill is en­acted, Rev­enue says it will pub­lish in­for­ma­tion on how the post­poned

stamp cer­tifi­cate can be ob­tained.

When it was first an­nounced in the bud­get, the de­ci­sion to triple the rate of stamp duty was met with some dis­may by the prop­erty in­dus­try, with some ar­gu­ing that it put Ire­land at a dis­ad­van­tage against other busi­ness cen­tres, par­tic­u­larly in the race for post-Brexit busi­ness.

Ur­ban ar­eas

Lon­don, for ex­am­ple, has a stamp duty rate of just 4 per cent, while in Madrid it is less than 2 per cent. How­ever, the 6 per cent rate is still in fact lower than the rates levied in Paris (7 per cent) and Cologne (6.5 per cent), and is on a par with both Am­s­ter­dam and Frank­furt. And, as mar­ket com­men­ta­tors such as Cush­man & Wake­field have noted, it’s un­likely to make in­vest­ing in ur­ban ar­eas such as Cork or Dublin unattrac­tive; where it might im­pact, how­ever, is on val­ues out­side of th­ese cities. It’s ex­pected that the in­crease to 6 per cent will re­sult in an ad­di­tional ¤376 mil­lion in rev­enue for the ex­che­quer.

The rise in stamp duty was also in­tro­duced along­side a more favourable de­ci­sion to cut the cap­i­tal gains tax ex­emp­tion on in­vest­ment prop­erty from seven to four years. It means that any­one who bought com­mer­cial prop­erty be­tween 2011 and 2014, and held it for four years or more, will be ex­empt from cap­i­tal gains tax when they sell. It is hoped that this mea­sure might boost trans­ac­tion lev­els in the prop­erty mar­ket – which of course will then also boost stamp duty rev­enues – even if it doesn’t quite boost sup­ply.

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