Stamp Duty

Understand the Tax measures of Budget 2025 which relate to property transactions, at a glance.

Today, the Minister for Finance and the Minister for Public Expenditure, NDP Delivery and Reform, announced the details of Budget 2025.

As anticipated, Budget 2025 introduced several tax measures in relation to property.

This article will focus on the property related tax measures introduced by Budget 2025, under Income Tax/Personal Tax, Residential Zoned Land Tax (RZLT), Stamp Duty, Vacant Homes Tax (VHT) and Value Added Tax (VAT).

INCOME TAX / PERSONAL TAX

 Rent Tax Credit

• Budget 2025 raised the Rent Tax Credit

• The Rent Tax Credit has been increased to €1,000 for individual renters, or €2,000 per year for jointly assessed married couples/civil partners.

• This applies to the tax years 2024 and 2025.

• Prior to this, the Rent Tax Credit for 2024 was worth €750 for a single individual and €1,500 for a jointly assessed married couple/civil partners.

• As a result of Budget 2025, these new rates have been backdated to cover the 2024 tax year as well as the 2025 year of assessment.

 Mortgage Interest Relief

• Mortgage Interest Relief has been extended.

• There has been no change to the qualifying criteria.

• Homeowners must have an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 as of 31st December 2022.

• Qualifying homeowners will be eligible for this tax relief in respect of the increased interest paid on their mortgage in 2024 as compared with 2022.

• Tax Relief is at the standard Income Tax rate of 20%.  The Tax Credit is capped at €1,250 per property.

• To claim Mortgage Interest Relief, the taxpayer must file a Tax Return and the taxpayer must be compliant with Local Property Tax (LPT) requirements.

Help to Buy Scheme

• The Help to Buy Scheme has been extended for a further four years at the current rates until the end of 2029.

• The aim of the scheme is to provide certainty for future homebuyers as well as the Irish property market.

• The Help to Buy Scheme is a tax rebate available to first-time buyers to enable them to buy a newly built or self-built house or apartment provided the cost of that purchase is €500,000 or less.

• With the extension of this scheme, first-time buyers of residential property will be able to continue to avail of (i) Income Tax and (ii) Deposit Interest Retention Tax refunds to help them purchase their home.

• The scheme offers a tax refund to first-time buyers, with a maximum value of €30,000 or 10% of the property price, whichever is less.

• The refund will be from the four tax years prior to when the application is made.

• The refund will not include any refunds already claimed.

Pre-Letting Expenses Relief

• Under Pre-Letting Expenses Relief, the current tax relief, capped at €10,000 per premises, for certain pre-letting expenditure will be extended for a further three years to 31^st December 2027.

• Section 97A TCA ‘97, which deals with rental expenses, provides that certain expenses incurred on a vacant residential property before its first letting following a period of non-occupancy are allowable as a deduction against rental income from that specific premises.

• To be allowable, the pre-letting expenses (capped at €10,000 per property) must be incurred on a property that was vacant for a minimum of six months and is then let as a residential property on/before 31^st December 2027.

• These provisions allow for a deduction for certain pre-letting expenses which, otherwise wouldn’t be allowable.

RESIDENTIAL ZONED LAND TAX (RZLT)

• As part of its strategy to meet an increased demand for housing, the Irish Government introduced the Residential Zoned Land Tax (RZLT), which is a new tax on land which is zoned for residential development and which has, in place, all the necessary services to develop housing.

• It was originally introduced in Finance Act 2021 and stated that owners of lands which are zoned under the RZLT were to be taxed at a rate of 3% of the site’s market value from 1^st February each year commencing in 2025.

• Owners whose properties are subject to Local Property Tax and have a garden exceeding one acre will not be obliged to pay Residential Zoned Land Tax. They will, however, be required to complete and file a Tax Return containing details of the property.

• Budget 2025 has provided landowners with an option to re-zone their land, based on the economic activity carried out on their land and to seek changes to the zoning maps in advance of the final maps being published on 31^st January 2025.

• In summary, Budget 2025 has announced a new process available to certain landowners to obtain an exemption from the tax in 2025 where their land should not be subject to the tax.

• Budget 2025 has also introduced a twelve month deferral of the liability between the date planning permission was granted and the commencement date of the development

STAMP DUTY

New 6% Residential Rate

A new 6% rate of Stamp Duty has been introduced on residential properties from 2^nd October 2024.

The stamp duty rates for residential properties will now be as follows:

• 1% on consideration up to and including €1m

• 2% on consideration over €1m and up to and including €1.5m

• 6% on consideration over €1.5m

The existing stamp duty rates will continue to apply to instruments executed before 1^st January 2025 on foot of a binding contract in place before 2^nd October 2024.

10% rate for Bulk Purchases increased to 15%

• Where a person acquires at least ten residential units during any twelve month period, the higher rate of stamp duty is being increased from 10% to 15%, with immediate effect.

• The existing 10% rate will continue to apply to instruments executed before 1^st January 2025 where a binding contract was in place before 2^nd October 2024.

VACANT HOMES TAX (VHT)

• A Vacant Homes Tax (VHT) was introduced by the Irish Government in Finance Act 2022 to encourage an increase in the supply of residential properties available for rent or purchase. As a further incentive, Budget 2025 has increased the rate of the VHT from five to seven times a property’s existing base Local Property Tax (LPT) liability.

• This will take effect from 1st November 2024 i.e. the next chargeable period for Vacant Homes Tax.

• VHT applies to any residential property which is occupied for less than 30 days in a twelve month period between 1st November and 31st October of the following year.

VALUE ADDED TAX (VAT)

VAT Rate on Heat Pumps

• A reduction in the VAT rate for heat pumps to 9% is effective from 1^st January 2025.

• This applies to the supply and installation of heat pumps.

• The heat pumps must meet specific technical standards, as outlined in the EU Directive.

• The aim is to encourage homeowners to install heat pumps to support climate action.

VAT Rate for Gas & Electricity

• The 9% rate of VAT on gas and electricity is to be extended until 30^th April 2025.

• The rate had been due to revert to 13½% on 1^st November 2024.

• The aim of this extension is to reduce the cost of living.

For full information on Budget 2025, please click https://www.gov.ie/en/publication/e8315-budget-2025/

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Finance Act 2017 increased the rate of Stamp Duty on all non-residential properties from 2% to 6% and includes non-residential lease premiums.  This 6% rate applies to documents executed on/after 11^th October 2017.

Although transitional measures have been introduced, this higher Stamp Duty rate will apply for conveyances executed from 1st January 2018.

To be able to avail of the previous 2% rate on commercial property (i.e. where contracts were entered into before 11th October 2017), the two following conditions must be met:

1. a binding contract must have been in place before 11th October 2017 and
2. the instrument for the transfer must have been executed before 1^st January 2018.

The increased Stamp Duty rate also applies to certain shares which derive their value or the greater part of their value, directly or indirectly, from Irish non-residential land and buildings.  The 6% Stamp Duty Charge was introduced by Section 31C SDCA 1999 on conveyances/transfers of shares in Irish and non-Irish companies.  The provision also applies to units in an Irish real estate fund, interests in foreign collective investments schemes as well as to interests in a partnership.

This 6% Stamp Duty rate will apply if the result of the transfer is a change in the person/persons having direct/indirect control over the non-residential property and where it would be reasonable to consider that the immovable property concerned was:

1. acquired by the company, IREF or partnership with the sole or main object of realising a gain from its disposal,
2. being developed by the company, IREF or partnership with the sole/main object of realising a gain from its disposal when developed, or
3. held as trading stock by the company, IREF or partnership.

Although the legislation applies to any instrument executed on or after 6^th December 2017, there are transitional provisions, which will limit the Stamp Duty rate to its existing rate (i.e. 1% or qualifying for an exemption) where:

1. A binding contract was entered into before 6^th December 2017,
2. the instrument is executed or the binding contract is completed before 1st March 2018 and
3. the instrument contains a statement certifying that the instrument was solely executed in pursuance of said binding contract which was entered into prior to 6^th December 2017.

The new rate will apply to contracts for sale of such shares as well as actual transfers of shares.

As the 6% rate applies to all non-residential property, this means the disposal of goodwill or the transfer of Debtors, as part of the sale of a business, could also give rise to a 6% Stamp Duty charge.

The rates of stamp duty on residential property remain at a rate of 1% up to the first €1,000,000 with 2% payable on the excess over €1,000,000.

The Stamp Duty rate on leases of commercial property will continue to be charged at a rate of 1% on the average annual rent.  However, where the landlord receives a premium from the tenant at the commencement of the lease, this will be subject to Stamp Duty at 6%.

Finance Act 2017 (Section 83D SDCA 1999) introduced a Stamp Duty Rebate Scheme in relation to land purchased for the purpose of developing residential property.  The Act provides that where Stamp Duty at the new higher rate of 6% is paid on the acquisition of land which is subsequently used to develop residential property, then the purchaser will be entitled to a rebate of 2/3 of the 6% upfront duty paid i.e. a potential refund of up to 4% can be claimed provided the following conditions are satisfied:

• The Stamp Duty Rebate Scheme is limited to the proportion of land used for residential development.
• The Scheme only applies where construction operations for residential property commence before 1^st January 2022 and construction must begin within thirty months of the date the land was acquired.
• The time required to conclude any planning appeal can be added to this thirty month period.
• The repayment cannot be claimed in advance of the commencement of construction operations.
• There is a four year time limit on claiming a repayment. The supporting documentation required to substantiate the claim include (i) a certified copy of the deed of transfer, (ii) a statutory declaration stating that building work commenced within the thirty month period immediately after the date the instrument was executed and (iii) written consent by all the accountable persons to the person making the claim.
• Where the Stamp Duty rebate claims relates to only part of the land, the Statutory Declaration must clearly state the specific part of the land to which the claim relates.
• The rebate will not carry interest.
• The refund can only be claimed via Revenue’s e-Stamping system.
• In situations where the residential development is being carried out in phases, repayments can be sought on a phased basis.
• The Rebate will be clawed back in two situations: (i) where the residential development is not completed within two years of acknowledgement, by the relevant building control authority, of the commencement notice or (ii) where at least 75% of the units or a minimum of 75% the total area of the land in question is not occupied.

Construction operations” is defined as the construction of buildings or structures including the preparatory operations of site clearance, drainage, earth-moving, excavation, laying of foundations and provision of roadways and other access works.

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

Introduction

Finance Act 2012 introduced a number of important changes to the stamp duty filing regime.

The changes apply to all instruments or deeds executed on or after 7^th July 2012.

Key Changes in Stamp Duty Filing Regime

Where the execution date of an instrument or deed is on or after 7^th July 2012:

1. Adjudication of the stamp duty liability will not be necessary or possible.
2. A late filing surcharge (5% or 10%) will apply where returns are filed late.
3. There are new criteria for making a valid “expression of doubt.”

What these changes mean

1. Instruments executed on or after 7^th July 2012 will no longer be subject to adjudication.
2. Stamp duty must be self-assessed in all such cases.
3. Where unclear about the stamp duty treatment of a particular matter in the return then there is an option to make “an expression of doubt” on the ROS form.
4. The criteria for making a valid expression of doubt are stricter.
5. Revenue can reject an expression of doubt as not being genuine.
6. If Revenue believes the expression of doubt is not genuine, they will issue a notice of rejection outlining the reasons.
7. To obtain a Stamp Certificate the filer must immediately lodge an amended return and pay the related liability.
8. The taxpayer will have the right to appeal to the Appeals Commissioner.
9. An expression of doubt will not be accepted where the Stamp Duty Return is filed late.
10. It is also possible to address technical tax queries to Revenue’s Technical Service (RTS).
11. Late Returns will be subject to a surcharge.
12. Revenue will continue to accept returns as being filed on time where filed up to forty four days after execution. (This is a Revenue Concession.)
13. A 5% or 10% surcharge will apply depending on the lateness of the Return. Further information is available on [http://www.revenue.ie/en/tax/stamp-duty/index.html].

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.