UPDATE ON STAMP DUTY CHANGES IN FINANCE BILL 2017
Transitional Arrangements relating to Commercial Property
The most significant change to Stamp Duty announced in the Budget Speech was the increase in the rate applicable to commercial property from 2% to 6%. The transitional arrangements applicable have been clarified on publication of the Finance Bill. There were some fears immediately following the Minister’s speech that the higher rate of duty would apply even where binding contracts to purchase had been signed prior to the Budget. This would have been a departure from the practice in previous years where the pre-Budget rate of duty had continued to apply to such transactions. It would also have had a penal effect on purchasers who had committed to buying commercial property but would now be facing unanticipated increases in purchase costs. The Finance Bill has now confirmed that the 2% rate of duty will continue to apply where a binding contract was entered into prior to midnight on 11 October 2017 provided the relevant instrument or deed transferring the property is executed before 1 January 2018. The instrument or deed must contain a certificate confirming that a binding contract had been entered into prior to 11 October 2017.
Land purchased for residential development
The Minister stated in his Budget Speech that a Stamp Duty Rebate Scheme is to be introduced in relation to commercial land purchased for the development of housing where development commences on the land within 30 months of purchase. The Finance Bill does not contain any details of this Scheme or how it will operate and it has been indicated that this will be introduced at the Committee stage of the Bill.
Transfers of Agricultural Land
The possible application of the increased rate of Stamp Duty to transfers of agricultural land caused a lot of unhappiness in the agricultural community. While previously a reduced rate was applicable to the transfer of farms in families, this was subject to a requirement that the transferor was not aged over 67. This upper age limit is to be removed, and such transfers will benefit from a fixed rate of 1%. It would appear however that the removal of the upper age limit will not come into effect until the passing of the Finance Act.
Leases of commercial property
The Stamp Duty rate on leases of commercial property will continue to be charged at a rate of 1% on the average annual rent. Where the landlord receives a premium from the tenant at lease commencement, this will be subject to Stamp Duty at the new 6% rate.
Transfers of Residential Property
The Stamp Duty on residential property remains unaffected by Budget 2018 and will continue to apply at a rate of 1% up to the first €1,000,000 with 2% payable on the excess over €1,000,000.
Leases of residential property
Short-term leases of residential property have not been subject to stamp duty unless the annual rent exceeded €30,000. This threshold has now been increased to €40,000.
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