# Does a lease have to be stamped



## johnstown (18 Apr 2008)

From a legal perspective, does a land (agirultural) lease between a mother and son (leasee) for a term of 10 years need to be stamped by the Revenue Commissioners?

The lease is required by the Department of Agriculture and they have said they do not care if the lease is stamped.


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## Crugers (18 Apr 2008)

johnstown said:


> From a legal perspective, does a land (agirultural) lease between a mother and son (leasee) for a term of 10 years need to be stamped by the Revenue Commissioners?
> 
> The lease is required by the Department of Agriculture and they have said they do not care if the lease is stamped.


 
Don't think so, but a 10 year lease will (I'm almost sure) incur VAT!!! Maybe you need to consult a professional...


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## murphaph (18 Apr 2008)

Could you elaborate on the VAT element of a ten year lease?


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## juke (18 Apr 2008)

From  a legal perspective (sorry) if there is a dispute, to be relied on in court, it must be signed and stamped.

As regards VAT (a minefield) any non residential lease for 10 years or more may be liable for vat. Professional tax advise needed i feel


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## johnstown (20 Apr 2008)

So I can sign the lease but not bother getting it stamped???

My solicitor wants to get the lease stamped.  Stamping will cost thousands (as it is below market value).  He has not actually confirmed to me if it is mandatory or not to have it stamped.  

The Department of Agriculture don't care if the lease is stamped.  

I rang the stamping office in Dublin Castle and the guy I spoke to said the lease needs to be stamped. 

This is all very confusing.  I think I will have to consult another solicitor.


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## Vanilla (20 Apr 2008)

It is mandatory to stamp this lease.


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## Madangan (20 Apr 2008)

johnstown said:


> So I can sign the lease but not bother getting it stamped???
> 
> My solicitor wants to get the lease stamped. Stamping will cost thousands (as it is below market value). He has not actually confirmed to me if it is mandatory or not to have it stamped.
> 
> ...


 
 Why do you have to contact another solicitor? Is it be cause the first  one did not give you the answer you *wanted* to hear? Look ,your solicitor has told you it needs to be stamped, more importantly the REVENUE has told you it needs to be stamped.. The department of Agriculture want sight of the lease for its purposes but that department is not in charge of collecting stamp duty the REVENUE is!


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## Orga (20 Apr 2008)

Let's separate the facts and they are few in this post - all of the comments are opinion soley - you have nothing to go on except phone conversations and verbal assurances to what may or may not be the questions to which you actually need an answer. 

So, your question: do you need to get your lease stamped?

The answer: No.

Could VAT/revenue implications arise?
The answer: Yes

When is it best to deal with these?
The answer: After they arise

Why after they arise?
The answer:Cos it will save you a lot of time, energy and trouble

What should you do now?
The answer: Proceed as is, do not get the lease stamped, save yourself money that you should invest in readily accessible account at a good interest rate - see the Best Buys section, submit the documentation to the Department and await developments.

What should you not do?
The answer:Accept as truth anything from revenue or solicitor that they are not willing to put in writing: next time you ask them a question on this topic, ask that they put the response in writing to you so that you have a copy, "just to keep this on record."

Good luck


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## mf1 (20 Apr 2008)

"So, your question: do you need to get your lease stamped?

The answer: No."

The answer to this is that you can do anything you like. You should stamp the lease, you are legally obliged to stamp the lease, but if you do not stamp the lease then issues are likely to  and will probably  arise. 

"Could VAT/revenue implications arise?
The answer: Yes"

Correct.

"When is it best to deal with these?
The answer: After they arise"

Always best to deal with issues before they arise. This is not good advice. 

"Why after they arise?
The answer:Cos it will save you a lot of time, energy and trouble"

No - this is simply asking for trouble. 


"What should you do now?
The answer: Proceed as is, do not get the lease stamped, save yourself money that you should invest in readily accessible account at a good interest rate - see the Best Buys section, submit the documentation to the Department and await developments."

Disagree - it is illegal and it is wrong.

"What should you not do?
The answer:Accept as truth anything from revenue or solicitor that they are not willing to put in writing: next time you ask them a question on this topic, ask that they put the response in writing to you so that you have a copy, "just to keep this on record."

I don't there is any indication that the OP is being advised other than correctly by solicitor. He has asked Revenue and they have  told him his legal obligations. Stamp Duty is a self assessment tax - it is not a question of "wait and see".

"Good luck"

Yes - with Tax Evasion. 


Unbelievable. 

mf


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## murphaph (20 Apr 2008)

Does any ten year commercial lease need to be stamped by revenue?


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## mf1 (20 Apr 2008)

murphaph said:


> Does any ten year commercial lease need to be stamped by revenue?



All Leases need to be stamped. End of story. 
Why does anyone work on the basis that legal requirements  do not apply to them?

mf


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## Orga (21 Apr 2008)

mf1 said:


> All Leases need to be stamped. End of story.
> Why does anyone work on the basis that legal requirements  do not apply to them?
> 
> mf



Would that it were that simple - on the face of it you are correct:all non-residential leases bear a charge to stamp duty etc etc but this is a "lease" between a mother and her son. The details of which are sketchy to say the least, it is unclear to me whether the OP really means a grant of use or right of beneficial use, it would be unusual in my experience for a formal lease given the tax implications to which it would give rise. Plenty more tax efficient ways to do business.
I certainly don't condone tax evasion or avoidance but without the full facts it remains my opinion that the OP should sit tight. After that we are only talking about opinions, that's what makes life interesting.


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## murphaph (21 Apr 2008)

mf1 said:


> All Leases need to be stamped. End of story.


Even residential leases? I hadn't heard that before.



mf1 said:


> Why does anyone work on the basis that legal requirements  do not apply to them?


Erm, was this aimed at me? I'm trying to ascertain my legal responsibilities and comply with the law. I don't know why would you assume otherwise!

Rather than starting a whole new thread, I have another couple of questions about tax on leases.

I have been reading [broken link removed] and it is unclear to me whether or not VAT would be due on the premises we intend to let out. They are 2 industrial units of relatively low value themselves which were built after 1972 but which would have cost less than 10% of the overall cost of the site to 'develop'. Are these units (basically lockups and no more) liable for VAT on a lease greater than 10 years?

If so, who is liable to pay the VAT on the lease? The tenant or landlord? Am I right in reading that ultimately the landlord is liable for paying the VAT to revenue but should invoice it to the tenant? What if the tenant is not VAT registered but should be?


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## mf1 (21 Apr 2008)

"From a legal perspective, does a land (agirultural) lease between a mother and son (leasee) for a term of 10 years need to be stamped by the Revenue Commissioners?

The lease is required by the Department of Agriculture and they have said they do not care if the lease is stamped."

For Orga. The above is the OP's post. If you were answering a different question ( i.e. was this a grant of user,) you should make that clear.


For murphaph

"Erm, was this aimed at me? "

No.


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## murphaph (21 Apr 2008)

Thanks mf1, so do residential leases also need to be stamped? I will shortly be letting a house and would like to have it all done properly?


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## mf1 (21 Apr 2008)

Correction on earlier post that All Leases need to be stamped. 


A lease of a house or apartment for a term not exceeding 35 years or for any indefinite term and where the rent does not exceed €30,000 per annum is exempt from stamp duty. 


Leases


From Revenue website. 

A lease is chargeable to stamp duty on both the premium (or fine) and the rent payable under the lease.

The duty chargeable on the premium is at the rate for residential or non-residential property as appropriate (as per tables above).

Table 3: Applicable rate on rent.  
Residential and Non-Residential Property Rate 
Lease for a term not exceeding 35 years or for any indefinite term 1% of the average annual rent 
Lease for a term exceeding 35 years but not exceeding 100 years 6% of the average annual rent 
Lease for a term exceeding 100 years 12% of the average annual rent 

A lease of a house or apartment for a term not exceeding 35 years or for any indefinite term and where the rent does not exceed €30,000 per annum is exempt from stamp duty. 

mf


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## murphaph (21 Apr 2008)

Ah grand, that's one less piece of paperwork.

Anyone have any thoughts on my above questions re: VAT on leases?


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## johnstown (21 Apr 2008)

I am not trying to engage in tax evasion, more tax avoidance.  

Ultimately I need a lease in place and this needs to be for a nominal amount (i.e. well below market value). 

I rang the Stamping sections of the Revenue in Cork, Galway and Dublin and got different stories.  The guys in Dublin say stamp duty will be 1% of the nominal value on the lease plus 3% of the capital value (market rent - nominal lease rent) multiplied by the term (i.e. 10 years).  This has something to do with what they deem to be a gift portion.  I cannot for the life of me find anything in the stamp duty info available on the Revenue web site that backs this up.  

My solicitor still thinks I am only liable for 1% of the market rent which would be fine (I would agree based on what I can find from trawling the Revenue website).  I rang our accountant and he said that the Revenue in Dublin are correct (i.e. not the solicitor). 

My original question was just does the lease need to be stamped.  The reason I was asking this was because the guy in the Department of Ag had told me they do receive leases that are not stamped.   It seems to me from some of the response that yes, I do need to get the lease stamped from a legal perspective.  This means people are obviously not getting their documents stamped or else they are submitting them to the Revenue late and paying the relevant penalties. 

Orga raised the question as to whether a "grant of use or right of beneficial use" would suffice.  All I can say is that the Department define a lease, as "A lease shall mean a term of years absolute for at least 5 years from the commencement date of the contract".


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## Madangan (21 Apr 2008)

Murphaph,

As to your question re vat on leases the answer my friend is blowing in the wind! In other words vat on property transactions is nightmarish. There are usually no simple answers as there can be many variables. Problem with vat is that while most of us can get to grips with the basic concepts behind income tax,inheritance tax and capital gains tax vat follows just a set of rules ..in my opinion not very understandable rules. A judge in the UK in a famous vat case descibed vat as" existing in a kind of fiscal themepark" i.e where things were often not what they seem.

This is a roundabout way of saying that you will not get an accurate answer on AAM. You need to your solicitor and your accountant to work together on this and they might well advise that you need to get specific advise from a vat specialist. I am a solicitor and I have no problem saying that vat scares the living daylights out of me...I know just enough about it to know that I am no specialist. I also think I know the answer to your queries but thinking and knowing are very different things.

It doesnt help that there are some major changes afoot in the whole vat on property system ...get specialist advice AAM is not a substitute for that especially re vat.


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## Madangan (21 Apr 2008)

Johnstown,

Surely the very simple answer is to have your solicitor and accountant talk to each other..only one of then can be right... one will convince the other(based on facts)  and then you will have your answer.


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## murphaph (22 Apr 2008)

Madangan said:


> Murphaph,
> 
> As to your question re vat on leases the answer my friend is blowing in the wind! In other words vat on property transactions is nightmarish. There are usually no simple answers as there can be many variables. Problem with vat is that while most of us can get to grips with the basic concepts behind income tax,inheritance tax and capital gains tax vat follows just a set of rules ..in my opinion not very understandable rules. A judge in the UK in a famous vat case descibed vat as" existing in a kind of fiscal themepark" i.e where things were often not what they seem.
> 
> ...


Thanks for the reply. I got my copy of VAT on Property Transactions today (Revenue are efficient aren't they!) and to be honest having read it again, I think my situation is one of the more straightforward scenarios they give examples of (there are many complex ones, especially when a lease is surrendered back) but the devil is certainly in the detail and the sticking point for me is the most basic question.....is the property actually to be considered a  "development" for VAT purposes at all?! I will need an accountant to take a look alright. Regards.


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