# Is the Stamp Duty promise now policy?



## frash (19 Jun 2007)

Hi,

Is Berties's pre-election promise to get rid of stamp duty for FTBs now policy or could he just cancel the idea?

I ask because I'm selling a house in the FTBs bracket & it was slow going before the election - I expected things to pick up once FF got into power but it hasn't yet.

Are FTBs waiting on it to become policy before committing?

Before anyone says it the house isn't over-priced.


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## NorfBank (19 Jun 2007)

According to yesterdays Indo Bertie says stamp duty will be abolished on residential purchases for First Time Buyers.
This will happen before the new government rises in July.
Tax will be abolished on all First Time Buyer purchases and will be back dated to April 30th last.


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## sandymount (19 Jun 2007)

frash said:


> Before anyone says it the house isn't over-priced.



The value of a home is subjective, a house is only worth what someone will pay for it. If you reduced the price to 1 euro it would sell. It is not selling at the price you/your EA have pitched it at. I would conclude it's worth somewhere between 1 euro and your asking price.


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## MrKeane (19 Jun 2007)

Are you looking for any more now than it was worth in say June 2005? I guess you are, so why should it be worth any more now than it was 2 years ago?


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## Afuera (19 Jun 2007)

How many other similar houses are up for sale in the area?


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## iguana (19 Jun 2007)

Is your house marketed at a price which you realistically expect a ftb to be able to pay?  If not why do you think stamp duty will make a difference?


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## ClubMan (19 Jun 2007)

frash said:


> I ask because I'm selling a house in the FTBs bracket


What do you mean? Under €317,500 or something else?


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## robd (19 Jun 2007)

frash said:


> Hi,
> 
> Is Berties's pre-election promise to get rid of stamp duty for FTBs now policy or could he just cancel the idea?
> 
> ...



How do you define FTB bracket?

If the house is price at > €317,500 then the stamp duty changes would make a difference to what they have to pay.  If it is priced under then the changes doen't make any difference to you not being able to sell.

There really aren't that many FTB's anymore (due to increased interest rates) with enough earnings to buy a house with a pricetag in excess of €317,500.  A single person would have to be earning €70,000 per year gross  to get a mortage for €317,500 (5.2% over 35 yrs).  A couple would have to earn €30,000 each to get the mortgage (5.2% over 30 yrs).

You can't expect an overnight change in viewer interest.  It's the slow summer months.  Traditional selling months are April and September.  On the flip side the last proper selling season was April 2006 and it's unknown when the next one will turn up.

You don't get to decide the value of your house, it's worth exactly what someone is prepared to pay for it.  End of story.

Best of luck.


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## NorfBank (19 Jun 2007)

Sorry robd, I must disagree.
There are many young first time buyers with enough earnings to qualify for a mortgage of €317500.
If you are under 30 and earn a gross salary of €52,000 then you can afford a 100% mortgage of this size on your own for a 2 bedroom property.

Whether they should go into such debt is another question but it can be done.


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## robd (19 Jun 2007)

NorfBank said:


> Sorry robd, I must disagree.
> There are many young first time buyers with enough earnings to qualify for a mortgage of €317500.
> If you are under 30 and earn a gross salary of €52,000 then you can afford a 100% mortgage of this size on your own for a 2 bedroom property.
> 
> Whether they should go into such debt is another question but it can be done.



In fairness €52,000 is at the upper end of what an under 30's person would be earning.  Granted there are people who earn this but it's no where near average.  €30-€40k would be nearer the mark.

Perhaps in November 2005 a person earning €52,000 could borrow that but not now.  See below for my calcs.

€52,000 is a net monthly take home of  €3218 for a single person. 
[broken link removed]

Standard max repayments being 40% of take home means max repayments of €1287.  With TRS of €133 I guess that could be max of €1420 before TRS is creditted.  http://www.jeacle.ie/mortgage/ gives repayments of €1423 over 35 years at 5.2% on a €275,000 mortgage.  You might get a little better than 5.2% but ECB + 1.2% is a pretty good average.  In November 2005 when ECB rates were at 2% a person on €52,000 could have borrowed €360,000 at 3.2% over 35 years.

The Permanent TSB calculator below gives a max mortage of €200,000 for a net monthly pay of €3218.
[broken link removed]

 are giving a max mortgage for €232,000 for gross annual salary of €52,000

I'm sure there's lenders out there that will give more but I don't think any of them will push to €317,500 at current interest rates.

Unfortunately, most people do not yet realise/understand/see the difference in borrowing power between November 2005 and now.  €360,000 in Nov 2005 to €275,000 today on a pretty high salary of €52,000.  It's more commonly know as a credit crunch and has been responsible for nearly every crash in history.


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## frash (20 Jun 2007)

Thanks a lot NorfBank for your brief & accurate reply to my question.

Thanks too to everyone else who replied but I knew it would dwindle down into a "your house is worth what people will pay" thread as so many do on this board.

My house is priced comparibly with other houses in my area. It went sale agreed last year at X Euro but the sale fell through. It is now marketed at a significant reduction from last years sale price & so should be realistic.


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## LivLand (20 Jun 2007)

The way to find the true value of your property is to put it on the market say 10 / 20% below the other houses in the market. This will get the interest of a few buyers and they will bid it upto the value that they are willing to buy. I.e the properties true value.


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## Bronte (20 Jun 2007)

Frash - just curious, as a percentage how much have you dropped the asking price by?

Robd - very interesting affordability has dropped by nearly 85K (360 - 275)- that'a a hugh amount, nearly 25% - WOW.  I realise it's for a certain category of buyer and doesn't apply to all and of course don't know the percentage of potential buyers this is made up of but interesting never the less.


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## andagda (20 Jun 2007)

I know that this constitutes a sample size of one, and so may not be relevant, but for what it's worth:

I _am_ a potential first-time buyer, and the change in stamp-duty has no bearing whatsoever on my willingness  or otherwise to buy a property. I am convinced that the stamp-duty issue is a red-herring and that any changes to stamp-duty will have little overall effect on my ability to compete with other potential buyers, some of whom are also benefiting from the same changes in stamp-duty that are supposedly benefiting me.

I'm not trying to convince you that what I'm saying is economically sound or correct, only that it is what _I _believe, and that as a first-time buyer it may be indicative of what other first-time buyers believe as well- which would explain why the re-election of FF and the implementation of their stamp-duty promises are not having their expected effect on the market.


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## frash (20 Jun 2007)

Aileen2 - to answer your question we have dropped the asking price to be 10% less than what we were sale agreed for last year.


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## AppleSun (20 Jun 2007)

yes majority of threads on this board  seem to go it's only worth what someone will pay for.... not exactly helpful to the seller now is it...

Frash, i am selling an apt. I have done research on the other peoperties for sale in my area. i have not sold yet but am getting 1-2 viewings a week. there is a glut of apartments, similar to mine that are 10k less than mine, to 20k over. my EA has several properties priced at or below mine however they have not been getting ANY viewings. 

2 EA's have told me it's not a price issue...(obviously if you drop it to 1 euro like someone mentioned  above ..it'd sell, but thats just a stupid suggestion).. the problem is getting serious viewers through the door. I have dropped the price of mine below the majority on the market but have been advised by EA's not to drop further.

FTB are renting instead of buying now as it's cheaper..

stamp duty isn't going to make a blind bit of difference... it's the rising interest rates if you ask me, and everyone is holding out cos they are hoping sellers will keep dropping prices...


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## shanegl (20 Jun 2007)

> 2 EA's have told me it's not a price issue...(obviously if you drop it to 1 euro like someone mentioned above ..it'd sell, but thats just a stupid suggestion).. the problem is getting serious viewers through the door.


 
I really don't understand this point of view. Why else would people stop buying houses? Where have all the serious viewers gone?

You even say here: 





> FTB are renting instead of buying now as it's cheaper..


 
At the end of it all it comes down to how quickly you want to sell. If you need a quick sale then you'll have to drop the price further. If you believe the house is worth what you're asking for then wait for for the market to pick up. But there's a chance that any neighbour that's after a quicker sale may pre-empt you and drop first, leaving you worse off. Its up to you.


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## AppleSun (20 Jun 2007)

deleted


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## AppleSun (20 Jun 2007)

deleted


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## AppleSun (20 Jun 2007)

shanegl said:


> I really don't understand this point of view. Why else would people stop buying houses? Where have all the serious viewers gone?
> 
> You even say here:
> 
> At the end of it all it comes down to how quickly you want to sell. If you need a quick sale then you'll have to drop the price further. If you believe the house is worth what you're asking for then wait for for the market to pick up. But there's a chance that any neighbour that's after a quicker sale may pre-empt you and drop first, leaving you worse off. Its up to you.


 
they are all gone renting according to the EA's as i've already mentioned... mortgages are less affordable... plus there's only so low you can drop the price before you start egtting yourself into negative equity...not a nice place to be IMHO


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## shanegl (20 Jun 2007)

I agree that mortgages are less affordable, but this means that it _is_ a price issue. Negative equity is a no-go, so if you can't drop it any further then the only thing to do is wait it out.


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## MrKeane (20 Jun 2007)

If I had a car for sale for a few weeks at say €10000 and nobody buys it then its is just too expenive, its a price issue and nothing else and to sell it I will need to reduce my price. The housing market shot up 20, 30 and 40% over a few years and there is no reason for it not to shoot back 20, 30 and 40% over a few years. Thats the reality of the situation, I am not saying houses will fall by 40% but in reality there is nothing that says our houses can't fall by this amount.

Its a speculative market no different to many others and for every winner there must also be a loser.


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## Nige (20 Jun 2007)

shanegl said:


> I agree that mortgages are less affordable, but this means that it _is_ a price issue. Negative equity is a no-go, so if you can't drop it any further then the only thing to do is wait it out.


 
Negative equity already exists if no one will buy a house for less than the outstanding debt.


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## MrKeane (20 Jun 2007)

I think what people on this thread mean by negative equity is that they don't want to sell their property for less than they paid for it and have a loan outstanding which they must repay to the bank, but yes, in reality they are in negative equity if no buyer is willing to pay them what they paid for it initially.


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## Meathman99 (20 Jun 2007)

Can anybody explain why everybody in the media seems intent on talking the property/construction sector into the ground?


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## shanegl (20 Jun 2007)

I wasn't aware that anyone could talk any industry into the ground. But sure, not to worry, if it does happen we can just talk it back up again.


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## robd (20 Jun 2007)

frash said:


> Thanks a lot NorfBank for your brief & accurate reply to my question.
> 
> Thanks too to everyone else who replied but I knew it would dwindle down into a "your house is worth what people will pay" thread as so many do on this board.
> 
> My house is priced comparibly with other houses in my area. It went sale agreed last year at X Euro but the sale fell through. It is now marketed at a significant reduction from last years sale price & so should be realistic.



Well frash,

[broken link removed]

Here's finance bill no. 2 which was approved by the dail today.  So it's law.  No stamp duty at all for first time buyers.
It would be good to hear back from you in 1 or 2 months as to how you've been getting on.  This would be a good indicator as to the effect of no stamp duty for FTB's.   I'll say no more as I suspect you don't like hearing what I have to say.


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## ubiquitous (20 Jun 2007)

robd said:


> Here's finance bill no. 2 which was approved by the dail today.  So it's law.


Not quite, yet...



> Legislation to allow for the abolition of stamp duty for first-time buyers has been published by the Minister for Finance Brian Cowen.
> ...
> Mr Cowen said he intends to have the Bill enacted before the Dáil summer recess in two weeks' time.


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## pc7 (20 Jun 2007)

I don't know that abolishing stamp duty will make the market get going again, every few hundred metres now there seems to be for sale signs up.  Mortgage interest rates are the real killer especially as houses seem to be overvalued. With more interest rate hikes on the way I think a lot of first time buyers are scared. My friend is selling her apartment at the moment there are lots for sale around her and 1 apartment dropped their asking price by 20 grand compared to those around and it sold, my friend won't even consider that, as she's decided what she feels her place is worth and doesn't want to let it go less than that. But you need to be realistic we put our house for sale last october, sale fell through once hopefully going through now in next week or two but its at least 50 grand less than we expected to get last October. That's just the way things seem to be now. Sorry very long winded post!


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## Nige (20 Jun 2007)

robd said:


> Well frash,
> 
> [broken link removed]
> 
> Here's finance bill no. 2 which was approved by the dail today. So it's law. No stamp duty at all for first time buyers.


 
It was approved by the Cabinet.

It has yet to go to the Dáil, and after that has to go to the Seanad and after that has to be signed by the President.


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## shanegl (20 Jun 2007)

robd said:


> Well frash,
> 
> [broken link removed]
> 
> ...


 
That article states that SD remains for floor areas above 125 sq metres. Not exactly the change that everyone was expecting.


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## mf1 (20 Jun 2007)

Very interesting. I wondered how anyone could justify getting f.t.b. status when paying more than ( oh, pick a figure you consider expensive!). At least this way there is a limit on the size.  And I had understood also that the whole idea of f.t.b. status was to give people a leg up when they might not otherwise be able to afford the stamp duty. 

Good news (not!) for vendors now as presumably they  will now have to pay someone to certify the floor area? How else will you pitch the property to f.t.b.'s?

mf


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## Afuera (20 Jun 2007)

frash said:


> My house is priced comparibly with other houses in my area. It went sale agreed last year at X Euro but the sale fell through. It is now marketed at a significant reduction from last years sale price & so should be realistic.


You still haven't said how many other similar houses are up for sale in your area though. Prices are set on the margins and maybe some of the other sellers are willing to negotiate at lower prices than you are?

Since inventory is at an all time high, I'd suspect that there is probably vast oversupply of properties for sale right now. On top of that, a lot of the investors that were buying last year have totally left the market (no more certainty of capital appreciation) so that's about 40% of the demand that existed last year up in smoke. Lower demand, higher supply... doesn't look very good I'm afraid if you're trying to sell. You'll need some way for your house to stand out amongst all the others.


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## NorfBank (20 Jun 2007)

Robd.
First Active will give €317500 (€317729 to be precise) on a 5 year fixed rate over 40 years on a salary of €52000.
Unfortunately a lot of people giving advice on this forum do not have access to the systems necessary to give a correct answer.


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## beattie (20 Jun 2007)

pc7 said:


> My friend is selling her apartment at the moment there are lots for sale around her and 1 apartment dropped their asking price by 20 grand compared to those around and it sold, my friend won't even consider that, as she's decided what she feels her place is worth and doesn't want to let it go less than that.


 
Therein lies the problem for many vendors. The market doesn't care what one pays for as asset. As other poster have mentioned prices will be set on the margins and if your friend maintains the same attitude it is unlikely that the apartment will sell.


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## LUFC (20 Jun 2007)

For people trying to sell houses/apartments & aren't willing to go below a certain price, do you realize that they're are energy ratings coming into homes (2009) & there is talk of a bill introducing minimum apartment sizes.
Now if your home has a bad energy reading, will this not further hamper your efforts to sell your house? same if your apartment is smaller then this propsed minimum sq ft, it will nearly be impossible to sell??
Given the possibility of more interest rates increases, people might be prudent to cut their loss now rather still have their house/apt still on the market in a years time holding out for a certain price.


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## robd (20 Jun 2007)

NorfBank said:


> First Active will give €317500 (€317729 to be precise) on a 5 year fixed rate over 40 years on a salary of €52000.


You've picked the most extreme case possible to prove you're right.  €52,000 is way above average income.  Most banks do not offer 40 year terms.  I presume you have to be under 25 to get the 40 year.  What % of FTB's earn €52k+, are under 25, are a professional (general qualifier for 100%), work in the same county that they wish to buy (this has been mentioned here as a qualifier for 100% mortgage). < 1% I'd say.

I checked the First Active website.  €314,029.27 for a 40 year 100% (5 year fixed at 5.4% APR) mortgage, provided you're a professional. It's €282k if you're not a professional.  It's €261k and €235k respectively on the tracker rate.

If you do enough massaging you can prove what you wish.  We're talking about averages though.  An average FTB can not get a €317k mortgage from an average sample of lenders.  Also 30 years is average not 40.



NorfBank said:


> Unfortunately a lot of people giving advice on this forum do not have access to the systems necessary to give a correct answer.



Ah OK Mr Mortgage Broker.  Your screen says yes.  Given that this is a web forum I belive info on websites to be sufficient for posting here.


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## Glenbhoy (20 Jun 2007)

As someone else touched on there, is the only limit the 125sq m - if so, that's a very serious loophole imo that will see the exchequer lose out on quite a bit of money needlessly.  Why did they not impose a price limit?  This leaves the system open to abuse on large scale - more ridiculously rushed through legislation, it's like the prsi upper rate debacle last December again - or am I ranting needlessly again?

http://www.finance.gov.ie/documents/publications/financebill2007no.2/FinanceBill2.pdf


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## Nige (20 Jun 2007)

how is the 125 sq m limit a loophole?


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## dewdrop (20 Jun 2007)

perhaps a naive question..how does your solicitor/revenue be sure you are a first time buyer thereby avoiding stamp duty.


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## Glenbhoy (20 Jun 2007)

Nige said:


> how is the 125 sq m limit a loophole?


It's not a loophole, but theoretically a person can now purchase a property for 1.5M so long as it's under 125sq m - chances are that FTB is getting a little help from elsewhere, but even if not, is that the type of person who needs to be exempted??
One would imagine that we will see a huge increase in child ownership of properties


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## mf1 (20 Jun 2007)

"how does your solicitor/revenue be sure you are a first time buyer thereby avoiding stamp duty."

The purchaser certifies certain things in the Deed - no-one else. So if you are lying, then the solicitor can only go on your word. Unless they acted  for you before and should know. 

Again, Revenue rely on the certificates in the Deed but its not rocket science for them to cross check a whole series of f.t.b.'s deeds claiming the exemption against anyone claiming mortgage interest relief.  All Deeds have to go to Revenue to be stamped or, if not stampable, to have a PD ( Particulars Delivered ) stamp affixed. The PD form carries the PPS  numbers of the parties. 

I have said it many times - Revenue are not stupid, tax is self assessment and even if "you get away with it" it will generally come back on you with penalties and interest down the line. 

mf


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## robd (20 Jun 2007)

dewdrop said:


> perhaps a naive question..how does your solicitor/revenue be sure you are a first time buyer thereby avoiding stamp duty.



I believe it's a trust system.  It's up to you to inform your solicitor whether you're a FTB or not.  The solicitor must pay the Duty as part of the transaction if you are not a FTB.  Revenue do various audit checks on their systems to police it.  You get fined penalties if they catch you not paying the correct duty.


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## Nige (20 Jun 2007)

Glenbhoy said:


> It's not a loophole, but theoretically a person can now purchase a property for 1.5M so long as it's under 125sq m - chances are that FTB is getting a little help from elsewhere, but even if not, is that the type of person who needs to be exempted??
> One would imagine that we will see a huge increase in child ownership of properties


 
that's the total ftb exemption being wrong, not a loophole related to the 125sq m limit.


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## Saudi (20 Jun 2007)

Hi

Interesting debate but are you guys sure the 125 sq m exception isn't just in respect of new build properties which would leave new builds in the same position as before the election.

S


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## Nige (20 Jun 2007)

Saudi said:


> Hi
> 
> Interesting debate but are you guys sure the 125 sq m exception isn't just in respect of new build properties which would leave new builds in the same position as before the election.
> 
> S


 
It's a new requirement for second hand houses as set out in the finance bill.


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## Jolly Man (20 Jun 2007)

Hi guys a little off the main topic but we are first time builders never owned a house i guess we still have to pay stamp duty on the land? 

Anyone Know?


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## Mynydd (20 Jun 2007)

The new bill that will abolish stamp duty for ftb's will even be backdated to 31 March. We closed on the 16th of March. Can I cry now?


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## Raskolnikov (20 Jun 2007)

Mynydd said:


> The new bill that will abolish stamp duty for ftb's will even be backdated to 31 March. We closed on the 16th of March. Can I cry now?


Ouch.

Has anyone got a link to the actual bill?


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## Mynydd (20 Jun 2007)

Raskolnikov said:


> Ouch.
> 
> Has anyone got a link to the actual bill?


 



http://www.oireachtas.ie/viewdoc.asp?DocID=7928


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## newbuild (20 Jun 2007)

I have to wonder that newspaper article referrred to above have its facts correct re the 125sq mtr restriction now being applied to 2nd hand homes for FTB

(looking at that bill doesn't help as i don't have the text of the original act that this amendment applies to so its hard to work out what the resultant document would say - anyway its in legalese which makes my head spin)

however looking at the plain english explaintion in

http://www.finance.gov.ie/viewdoc.asp?DocID=4770

1. <lists the first time purchaser rates as they stand today>

2. The Bill, when it is enacted, will in effect reduce all these first-time purchaser rates to nil so that every first-time purchaser, who acquires as his or her only or principal place of residence a new or second-hand house or apartment, will not be liable to stamp duty. 

point 2 seems to say to me that the intent of the bill is to abolish stamp duty for 1st time buyers of all types and sizes of homes.

Like i said i could be wrong as i haven't cut'n'paste the sections referred to in the amendment into the actual act but it seems a very unlikely scenario to me.


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## newbuild (20 Jun 2007)

Now that i look at that [broken link removed] again it was updated this evening and the comments about the 125sq mtrs on 2nd hand properties are no longer there. 

So its seems it cuold have indeed have been a case of inaccurate reporting.

As someone else noted it might keep the upper end of the market going with small children buying houses for their parents and saving them '000s in SD. Not sure that would be the governments intended consequence of the change though.


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## Trustmeh (20 Jun 2007)

fair play "new build". i couldnt be bothered correcting the earlier poster that claimed the 125mtr part of the new bill.  so much dis-information.

it goes to prove that we are still not in comfortable territory for buyers...they will still be waiting for the bill to be passed - and so they should.


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## noilh (21 Jun 2007)

Mynydd said:


> The new bill that will abolish stamp duty for ftb's will even be backdated to 31 March. We closed on the 16th of March. Can I cry now?



Don't cry - enjoy your new home - oh and be sure to check what date is on your Deed of Transfer - if it's going to be on or after 31st March 2007 you'll be laughing.


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## elefantfresh (21 Jun 2007)

As a FTB do i have to pay SD on a 80k site and my new build which is more than 125sqm?
I'm not a legal guy and that document may as well be written in greek.


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## MrKeane (21 Jun 2007)

elefantfresh said:


> As a FTB do i have to pay SD on a 80k site and my new build which is more than 125sqm?
> I'm not a legal guy and that document may as well be written in greek.


 
That was mentioned on todayFM last night and the answer appears to be no, sure and 80K site is under the threashold anyway.

But I am not a legal guy either so don't assume I am right.


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## Jolly Man (21 Jun 2007)

I half heard it on today FM last night also but my boss interupted it and i did not fully hear it. Can anyone confirm if i am due to pay €120,000 for a site next week house 3,000sqf will i have to pay stamp duty?


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## Nige (21 Jun 2007)

The 125sq m provision was already law (section 92B(3A). This does not appear to have been amended by the new bill.


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## core123 (21 Jun 2007)

Hey Mynydd, I'm in the same boat as you. Closed at the end of Feb. After Cowen saying he was doing nothing to Stamp duty in the budget i thought i'd take the plunge. Being selfish here but why did he not backdate it to the 1st of Jan. Ah well c'est la vie. At least I have the beautiful Irish summer weather to cheer me up


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## elefantfresh (21 Jun 2007)

Nige said:


> The 125sq m provision was already law (section 92B(3A). This does not appear to have been amended by the new bill.


Does that mean that i wont pay SD on the price of the site as its "only" 80k but that i will pay SD on the price of the house itself?


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## Nige (21 Jun 2007)

If you are buying a site and entering a contract to have a house built on that site, you are treated as if the entire contract is for the purchase of the property and the stamp duty is applied accordingly.

If you are building yourself, then there is no stamp duty on the house part but there is stamp duty on the site (the 80k is not under the limit as the site is not residential property and would be subject to stamp duty at 5%).


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## elefantfresh (21 Jun 2007)

Cool - so that means i'll pay 4k SD on the site and thats the end of it?
Thanks for your help.


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## Nige (21 Jun 2007)

elefantfresh said:


> Cool - so that means i'll pay 4k SD on the site and thats the end of it?
> Thanks for your help.


 
If it's a self build, yes.


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## Jolly Man (21 Jun 2007)

So my self build ill be paying 8% site value €120,000. €9,600 no help for us poor self builders.


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## Nige (21 Jun 2007)

Jolly Man said:


> So my self build ill be paying 8% site value €120,000. €9,600 no help for us poor self builders.


 
If you are buying the site, yes.

If you are getting the site as a gift, the site exemption might apply.


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## Paraic (21 Jun 2007)

Hi
Just to clarify one point. For First-time Buyers,
Under existing provisions, no stamp duty is paid on houses or apartments worth less than €317,501. Between that figure and €381,000, 3 per cent is paid. On houses between €381,001 and €635,000, the rate is 6 per cent; for houses or apartments over that figure, the rate is 9 per cent.
The new measure will abolish stamp duty for all first-time purchasers. 

This includes all houses above 125sqm and no limit to price.

Regards

Paraic

www.obrienfinlay.ie


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## vagga (21 Jun 2007)

thanks for the clarity Paraic!


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## Trustmeh (21 Jun 2007)

SPC100 said:


> They would obviously rather keep the existing system which encourages people to commit fraud



I totally agree with you.  The amount of people I know at work that are getting "advice" from solicitors to avoid stamp by trying to buy in wifes name etc is crazy.  When you are talking about 9% on a million or more you just asking for people to try and commit fraud.


Will the revenue go after the tax evader/avoiders?


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## shanegl (21 Jun 2007)

> Removing a price limit benefits super-rich ftbs unfairly, the average FTB might be looking at 300-500.



The average FTB is well below the previous limit of 317.


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## Trustmeh (21 Jun 2007)

Thats exactly the point - why create a law that can only benefit FTBs that are rich. Or Married Couples that feel two spouses mean two FTB exemptions.  Plenty of poeple think its OK to try and use FTB on each spouse, ie there second house purchase.


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## shanegl (22 Jun 2007)

And how many houses are worth 1m? Not many in the country as a whole. How many will be bought by FTBs? A fraction. Between 5 and 8% of FTBs in 2006 were above the 317 threshold. That's before you even go up to crazy figures like 1 mill.


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## Glenbhoy (22 Jun 2007)

shanegl said:


> And how many houses are worth 1m? Not many in the country as a whole. How many will be bought by FTBs? A fraction. Between 5 and 8% of FTBs in 2006 were above the 317 threshold. That's before you even go up to crazy figures like 1 mill.


Well, if that's the case, can you explain why there was no limit imposed??  It's absolutely stupid not to have a limit imo - if as you say only a small % of FTB's pay more than 317K anyway, what was to stop them putting a limit say, 50% above that, like 450K for example.
It's just another example of shoddy ill thought legislation introduced by a man I used to think was quite competent.


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## mf1 (22 Jun 2007)

Perhaps it is quite clever. Suppose you had lots of friends who had off spring  who wanted to buy beautiful houses ( no 317K limits for them!) but hated paying stamp duty? What better way of pleasing them? In reality, the number of FTB's who will have access to huge wads of cash or big mortgages has to be relatively small. 

A stroke of genius perhaps?

mf


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## shanegl (22 Jun 2007)

How is it a side effect that average FTBs stay out of the market?


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## shanegl (22 Jun 2007)

Glenbhoy said:


> Well, if that's the case, can you explain why there was no limit imposed?? It's absolutely stupid not to have a limit imo - if as you say only a small % of FTB's pay more than 317K anyway, what was to stop them putting a limit say, 50% above that, like 450K for example.
> It's just another example of shoddy ill thought legislation introduced by a man I used to think was quite competent.


 
Because "Stamp Duty removed for FTBs" sounds much, much better than "Stamp Duty limit increased for FTBs". Its a stunt, plain and simple. How could it be otherwise, when the vast majority of FTBs don't need SD assistance. They can't buy houses because they can't afford them at current prices anymore, nothing to do with SD.
I just don't understand how the average FTB can be helped in any way, short of giving them money!


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## Afuera (22 Jun 2007)

shanegl said:


> How is it a side effect that average FTBs stay out of the market?


I think there's a danger that some potential FTBs will not want to waste their stamp duty exemption to purchase a starter home. Many FTBs were previously buying with the exception of trading up in the near future as these were the only properties they could afford. Having FTB status has suddenly become a lot more valuable though! Some FTBs could be tempted to continue holding onto this status, and rent in the meantime, until they come across the house that they see themselves living the rest of their lives in.


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## Bronte (25 Jun 2007)

If a married couple wants to buy a house in one name to be a FTB (for let's say the first apartment in one name and then the first house later in the other name) how is that fraud.  It's not illegal.  It's called common sense and avoiding paying tax.


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## Afuera (25 Jun 2007)

Aileen2 said:


> If a married couple wants to buy a house in one name to be a FTB (for let's say the first apartment in one name and then the first house later in the other name) how is that fraud. It's not illegal. It's called common sense and avoiding paying tax.


This sounds illegal to me. Since the buyer of the apartment would have a beneficial interest in the purchase of the house, Revenue would not give FTB status for the purchase of the house. Declaring otherwise would be tax evasion.


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## Glenbhoy (25 Jun 2007)

I wouldn't think there's anything illegal about it, it is however very risky from a personal perspective, trust......


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## shanegl (25 Jun 2007)

It is illegal if you avoid paying SD in the manner above. All contributors to the cost of the house must be FTBs, not just the person on the deeds.


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## Bronte (25 Jun 2007)

Well you're all forgetting that not all married couple buy property jointly.  They don't have to.  Some people keep their finances completely separate.  Also nowadays it's not uncommon for people to already own a house each before they get married and they would have been FTB for stamp duty purposes.


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## Glenbhoy (25 Jun 2007)

shanegl said:


> It is illegal if you avoid paying SD in the manner above. All contributors to the cost of the house must be FTBs, not just the person on the deeds.


Why, whoever has their name on the deeds is the legal owner, or do you propose hitting tenants for SD too (talk about stealth taxes)??


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## Afuera (25 Jun 2007)

Glenbhoy said:


> Why, whoever has their name on the deeds is the legal owner, or do you propose hitting tenants for SD too (talk about stealth taxes)??


There's more to claiming FTB status than just having a FTBers name on the deeds. It must be their PPR and the origin of the funds to buy and pay for the property must also be verified. If a non FTBer has a "beneficial interest" in the property then it will not qualify. I find it very hard to see how one half of a married couple could buy a PPR as a FTBer without it being of some benefit to the other partner.


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## shanegl (25 Jun 2007)

Glenbhoy said:


> Why, whoever has their name on the deeds is the legal owner, or do you propose hitting tenants for SD too (talk about stealth taxes)??


 
I'm not proposing anything, they are the rules according to the Revenue:



> To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer. …
> This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.
> Notwithstanding this treatment, to take account of the particular circumstances which have arisen, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:
> • The transfer of the house is taken in the name of the child.
> ...


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## Afuera (25 Jun 2007)

Aileen2 said:


> Well you're all forgetting that not all married couple buy property jointly. They don't have to. Some people keep their finances completely separate.


It's sounds like it's on shakey ground to me. I'm not too sure that Revenue would be satisfied that it was not set up simply to avoid tax.



Aileen2 said:


> Also nowadays it's not uncommon for people to already own a house each before they get married and they would have been FTB for stamp duty purposes.


If they moved in together before owning the properties for 5 years then they would have to pay a stamp duty clawback on one of them. Otherwise there is no problem with this. A married couple claiming that they have separate PPRs would look very suspicious and sounds very much like fraud if it means that they reduce their tax bill because of it.


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## Glenbhoy (25 Jun 2007)

> There's more to claiming FTB status than just having a FTBers name on the deeds. It must be their PPR and the origin of the funds to buy and pay for the property must also be verified. If a non FTBer has a "beneficial interest" in the property then it will not qualify. I find it very hard to see how one half of a married couple could buy a PPR as a FTBer without it being of some benefit to the other partner.


I think it would be quite easy, although risky from the p.o.v of the co-purchaser.
Firstly, the bank will only lend money to whoever has their name on the deeds, so presumably that person will have to satisfy the banks income requirements (yes, they do actually have some).  That will take care of any revenue reqmnt's re 'borrowers' being party to the loan used to fund the purchase.
Secondly, the non-FTB cannot provide the source of the deposit - unless, presumably gift tax is paid (depending on thresholds etc).
Thirdly, the non-ftb can pay their portion of the mortgage as rent to the purchaser, so long as the purchaser pays taxes etc if applicable, what's the problem?
After several years, and presumably after marriage, then the non-ftb can have their name written into the deeds.  In saying all that, it's be very foolhardy to engage in this sort of behaviour.


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## KalEl (25 Jun 2007)

Glenbhoy said:


> Secondly, the non-FTB cannot provide the source of the deposit - unless, presumably gift tax is paid (depending on thresholds etc).
> After several years, and presumably after marriage, then the non-ftb can have their name written into the deeds. In saying all that, it's be very foolhardy to engage in this sort of behaviour.


 
There's no gift tax between spouses and the limit is €497,000 form parent to child so where you get the deposit is largely irrelevant.
I don't think it would be foolhardy at all, tax avoidance rather than tax evasion.


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## Glenbhoy (25 Jun 2007)

KalEl, the foolhardiness comes about because of the risk of the relationship breaking up acrimoniously.
I was suggesting the scheme more for unmarried couples, as they'd be less likely to attract revenue suspicion.


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## Afuera (25 Jun 2007)

KalEl said:


> There's no gift tax between spouses and the limit is €497,000 form parent to child so where you get the deposit is largely irrelevant.
> I don't think it would be foolhardy at all, tax avoidance rather than tax evasion.


I really doubt that those course of actions would pass by Section 811 of the Taxes Consolidation Act, 1997. The whole transaction you have described is set up soley to reduce the tax liability during the purchase. i don't think Revenue would have much problem getting the "gift" recharacterized to what it really is, i.e. "purchase monies" for the property.


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## KalEl (25 Jun 2007)

Afuera said:


> I really doubt that those course of actions would pass by Section 811 of the Taxes Consolidation Act, 1997. The whole transaction you have described is set up soley to reduce the tax liability during the purchase. i don't think Revenue would have much problem getting the "gift" recharacterized as what it really is, i.e. "purchase monies" for the property.


My parents gave me the deposit for my first home...that was all above board. I don't see the issue here.


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## Afuera (25 Jun 2007)

KalEl said:


> My parents gave me the deposit for my first home...that was all above board. I don't see the issue here.


Do they retain an interest in the property?


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## KalEl (25 Jun 2007)

Afuera said:


> Do they retain an interest in the property?


 
Of course not


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## Afuera (25 Jun 2007)

KalEl said:


> Of course not


Then there was no tax avoidance in your case.

One half of a married couple using money gifted to them by their partner to buy a property as a FTB, is a totally different ball game. The non-FTBer will automatically have an interest in the new property (since the family home can not be sold without the permission of both spouses, even if only one of them owns it).


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## KalEl (25 Jun 2007)

Afuera said:


> Then there was no tax avoidance in your case.
> 
> One half of a married couple using money gifted to them by their partner to buy a property as a FTB, is a totally different ball game. The non-FTBer will automatically have an interest in the new property (since the family home can not be sold without the permission of both spouses, even if only one of them owns it).


 
Revenue would have to clarify the situation, plus there's the whole area of not renting the second property out and where do the coupkle live.

Imagine it from this point of view...John owns a house, Mary does not. They get married. The house is still in John's name yet in reality as they're married she owns half. Is she still a FTB if she goes to buy a property?
You'd have to say yes but it's a loophole.


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## Afuera (25 Jun 2007)

KalEl said:


> Revenue would have to clarify the situation, plus there's the whole area of not renting the second property out and where do the coupkle live.
> 
> Imagine it from this point of view...John owns a house, Mary does not. They get married. The house is still in John's name yet in reality as they're married she owns half. Is she still a FTB if she goes to buy a property?
> You'd have to say yes but it's a loophole.


I don't think she owns half of the house, just because they're married... Although she may end up getting half of it if they get divorced.

Yes, she would be still considered a FTB but to use it she would have to purchase on her own and make it her PPR. This could complicate John's status on his own property. The single wage and lack of equity would limit what kind of property she could purchase.

The scenario you describe is not disimilar to the situation that two single homeowners would find themselves in should they marry each other. They would have both obtained FTB relief and funded two seperate properties between them.


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## shanegl (25 Jun 2007)

deleted


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## Bronte (26 Jun 2007)

The clawback of stamp duty is only relatively new.  

Getting married does not mean you are co owner of your partner's existing property.  Even if you have to sign documents in relation to purchase or sale it does not mean the non purchasing partner owns the property.  

This is the scenario that is completely legit and it does happen.  Spouse 1 10 years ago purchased his first property.  Gets married to spouse 2 and she has been saving for ages and has deposit and high flying job and decided to purchase a house.  She has the deposit and they move in and it becomes their PPR,  and she pays the mortgage.  He has no legal interest in the house.  Meanwhile  he rents his house out for just less than 1 year, no clawback of SD as it's over 10 years old and then he sells it and there is no capital gains tax either (can sell previous PPR within 1 year or so).   5 years later they divorce, the divorce settlement give him the house and custody of the kids.  She then purchases a new house as a FTB again under the new rules allowing divorcing couple to do this.  There is nothing illegal in any of the above.  Why do people always assume that if you avoid paying tax that your are doing something illegal.


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## dewdrop (26 Jun 2007)

if a ftb because of work rents his property say in year 5 since the purchase is he liable to the same amount of clawback in stamp duty as if he rented it from day one.  seems unfair if he is. incidentally do solicitors point out the clawback angle re renting when ftb are buying.  i suspect people can forget about it after 4 years or so.


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## KalEl (26 Jun 2007)

dewdrop said:


> if a ftb because of work rents his property say in year 5 since the purchase is he liable to the same amount of clawback in stamp duty as if he rented it from day one. seems unfair if he is. incidentally do solicitors point out the clawback angle re renting when ftb are buying. i suspect people can forget about it after 4 years or so.


 
Ignorance of taxation law is no excuse. The whole point of stamp duty exemption is that you're living there for a set period, in this case five years. I think the law is quite fair actually. It's like people buying affordable housing..they have to keep it for a set amount of time or else pay back most of the discount. You have to have some restrictions


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## Howitzer (26 Jun 2007)

Aileen2 said:


> This is the scenario that is completely legit and it does happen. Spouse 1 10 years ago purchased his first property. Gets married to spouse 2 and she has been saving for ages and has deposit and high flying job and decided to purchase a house. She has the deposit and they move in and it becomes their PPR, and she pays the mortgage. He has no legal interest in the house. Meanwhile he rents his house out for just less than 1 year, no clawback of SD as it's over 10 years old and then he sells it and there is no capital gains tax either (can sell previous PPR within 1 year or so). 5 years later they divorce, the divorce settlement give him the house and custody of the kids. She then purchases a new house as a FTB again under the new rules allowing divorcing couple to do this. There is nothing illegal in any of the above. Why do people always assume that if you avoid paying tax that your are doing something illegal.


 
Because due to blind ignorance a lot of people in this country WILL use the illegal route to avoid paying tax when many perfectly legitmate tax avoidance measures are open to them.

The amount of downright stupid decisions taken by people with severe tax related consequences that are discussed on this site is a testament to that. I'm not saying those individuals are stupid, but their descisions are. And generally the reason for their decisions is ignorance of the law. And the worst part is that they usually think they're being smart.


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## KalEl (26 Jun 2007)

Howitzer said:


> Because due to blind ignorance a lot of people in this country WILL use the illegal route to avoid paying tax when many perfectly legitmate tax avoidance measures are open to them.
> 
> The amount of downright stupid descisions taken by people with severe tax related consequences that are discussed on this site is a testament to that. I'm not saying those individuals are stupid, but their descisions are. And generally the reason for their descisions is ignorance of the law. And the worst part is that they usually think they're being smart.


 
Exactly...there must be thousands of people across Ireland who think that because the rent on their investment property equals the mortgage they have no income tax liability.


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## Bronte (27 Jun 2007)

Howitzer & Kal, I don't entirely agree with you.  I've met young Irish people who literally think buying a house is like buying a piece of furniture, and they are so caught up in the complexity of buying a house that they don't understand all the implications.  This I don't agree is through ignorance or stupidity.  It easy for people on AAM who are experts on taxes/laws/compliance to know what to do but for others it's not so easy.   I do my best to try to understand all the tax/laws/compliance issues myself but it's a complete maze and it changes every few years just for the fun of it, it seems.  (Part of the reason I use AAM is to learn, and nearly every week I learn something new.)  Even getting a mortgage from a bank is in most cases a nightmare.  People are just doing their best to get on the property ladder and I feel sorry for those people who buy a 2 bed apartment with no stamp duty, change job, move and have to buy elsewhere and then get caught with stamp duty claw back, and they now probably have to buy a house to house a family at even more expense plus stamp duty on this as they've lost their first time buyer status.  

Actually I don't think the no stamp duty for FTB helps them at all in the first place.   Mortgage interest relief would probably be more beneficial as it would hit the bottom line - their monthly pay packet.  

Maybe when people purchase they should have to sign a document that they understand the tax issues/claw back of stamp duty etc if they decide to sell in the future, I'm sure this info gets lost in the huge transaction that is a property purchase.


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## LDFerguson (27 Jun 2007)

Don't forget that if a FTB sells the property within five years in order to part-fund the purchase of the new home, no clawback occurs.  

So therefore the only people subject to the clawback are those who choose to become property investors as distinct from people who simply want or need to move home.


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## LDFerguson (3 Jul 2007)

I see that in the Dail the issues up for debate between today and Thursday include amendments to the new legislation abolishing stamp duty for first-time buyers.

[broken link removed]

Does anyone know if these are minor technical points or something else?


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