# Revenue clampdown on investor stamp duty



## ClubMan

According to [broken link removed]:


> *Revenue in stamp-duty crackdown *
> 
> The Revenue Commissioners are cracking down on buyers of new houses and apartments who do not pay stamp duty.
> 
> The officers are checking whether buyers are living in the properties. Owner-occupiers who buy a new property do not have to pay stamp duty, but they must continue to live in the property, otherwise they are regarded as investors.
> 
> Investors who avoid stamp duty, by claiming to be owner-occupiers and then renting out the property, could be hit with a double tax bill - the unpaid stamp duty plus tax due on any rent paid.
> 
> ...


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## RainyDay

In a similar vein, from today's Indo Probes to follow stamp duty swindle


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## beattie

Is this really a large scale occurrence, I would have thought that it is a very big chance for someone to take incase one tenant they may have would end up reporting them to the revenue at any stage if there was a falling out.


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## stuart

Is it any surprise?
The amounts of money involved are massive

I have been stating this for about 2 years now and have been warning any existing/potential clients of this problem

It is not difficult to be caught
Revenue have tax payers PPS numbers from tax returns/tenants reporting them

They also have their PPS numbers from the stamp duty return filed by the solicitors

It will be like shooting fish in a barrell

You need to register for the link

http://www.unison.ie/irish_independent/stories.php3?ca=299&si=1456259&issue_id=12908

stuart@buyingtolet.ie


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## ClubMan

stuart said:
			
		

> I have been stating this for about 2 years now and have been warning any existing/potential clients of this problem


Is there any "whistleblowing" legislation whereby an intermediary such as yourself (not sure what your precise role/profession is) is obliged to report actual or suspected tax evasion by clients to _Revenue_?


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## mf1

I posted this a while ago as an indication of where the solicitors might have a  problem if engaging with clients to defraud Revenue - I was criticised  at the time for posting incorrect information by a contributor (obviously with serious tax knowledge and expertise) although I never found out to what he was referring. Anyone got an up dated legislative reference? 

I think that its clear from this board that stamp duty is regarded by many  people as an irritant ( can't deny that!) but one that should be avoided ( if possible) and further evaded if there is any possibility of  geting away with it. Like stuart says, I regard it as a no brainer for a non owner occupier to purchase and claim the f.t.b. or owner-occupier relief - it is just too easy to spot, stamp duty  is a self assessment tax and it will almost inevitably come back to bite you on the bum if you do not address it properly. 





For the purposes of clarifying where the solicitors possible liability arises............

I quote Section 8(1) Stamp Duties Consolidation Act 1999. 


8.— (1) Except as provided for in this section, all the facts and circumstances affecting the liability of any instrument to duty, or the amount of the duty with which any instrument is chargeable, are to be fully and truly set forth in the instrument.

(2) Where it is not practicable to set out all the facts and circumstances, to which subsection (1) refers, in an instrument, additional facts and circumstances which—

(a) affect the liability of such instrument to duty,

(b) affect the amount of the duty with which such instrument is chargeable, or

(c) may be required from time to time by the Commissioners,

are to be fully and truly set forth in a statement which shall be delivered to the Commissioners together with such instrument and the form of any such statement may from time to time be prescribed by the Commissioners.

(3) Any person who—

(a) fraudulently or negligently executes any instrument, or

(b) being employed or concerned in or about the preparation of any instrument, fraudulently or negligently prepares any such instrument,

in which all the facts and circumstances affecting the liability of such instrument to duty, or the amount of the duty with which such instrument is chargeable, are not fully and truly set forth in the instrument or in any statement to which subsection (2) relates, shall incur a penalty of—

(i) £1,000, and

(ii) the amount, or in the case of fraud, twice the amount, of the difference between—

(I) the amount of duty payable in respect of the instrument based on the facts and circumstances set forth and delivered, and
(II) the amount of duty which would have been the amount so payable if the instrument and any accompanying statement had fully and truly set forth all the facts and circumstances referred to in subsections (1) and (2).


mf


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## Eurofan

beattie said:
			
		

> Is this really a large scale occurrence, I would have thought that it is a very big chance for someone to take incase one tenant they may have would end up reporting them to the revenue at any stage if there was a falling out.



Plenty of people willing to take the risk though. I know of two personally who would be liable. One has moved to the UK and is renting out her FTB house in Ireland while she lives abroad, no stamp duty clawback, no tax declared. The other simply bought up to a nicer house and is doing the same. I suspect there are quite a few amateur landlords in the latter catagory. I couldn't sleep at night waiting for that letter to come in the mailbox...


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## RainyDay

Eurofan said:
			
		

> Plenty of people willing to take the risk though. I know of two personally who would be liable. One has moved to the UK and is renting out her FTB house in Ireland while she lives abroad, no stamp duty clawback, no tax declared. The other simply bought up to a nicer house and is doing the same. I suspect there are quite a few amateur landlords in the latter catagory. I couldn't sleep at night waiting for that letter to come in the mailbox...


And what's the betting that in 5 years time, when the Revenue bill (including interest & penalties) does arrive, they'll be whinging about how it's all Revenue's fault and how they should have caught them out earlier!


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## ClubMan

Eurofan said:
			
		

> Plenty of people willing to take the risk though. I know of two personally who would be liable. One has moved to the UK and is renting out her FTB house in Ireland while she lives abroad, no stamp duty clawback, no tax declared. The other simply bought up to a nicer house and is doing the same. I suspect there are quite a few amateur landlords in the latter catagory. I couldn't sleep at night waiting for that letter to come in the mailbox...


It'd be interesting to know how many of individuals in this situation moan about so called "rip-off Ireland" and high taxes?


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## bb1

it is a rip off, I have a friend who is gone travelling for a a year, she was in her house a year, no stamp duty paid as she was a ftb.  She had the choice of handing over €12k to revenue for stamp duty clawback, paying tax on her rental income & then capital gains when she sells the house OR just renting the house out on the qt.  The rent she is getting is covering her mortgage now but little else and she is going to move back in her house when she is back.  Was she supposed to leave the house empty? She couldn't afford to pay the stamp duty.  When she spoke to the revenue about this, the guy on the phone, basically said to say nothing!


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## ClubMan

bb1 said:
			
		

> it is a rip off, I have a friend ...


Your friend is the one who is ripping the state and the rest of us off by evading three taxes - stamp duty (clawback - the fact that she could not afford this is neither here nor there), income tax on rental income (the fact that it just covers the mortgage is neither here nor there) and _CGT o_n part of the eventual resale gain.


> When she spoke to the revenue about this, the guy on the phone, basically said to say nothing!


Sorry - I simply don't believe this.


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## RainyDay

The real rip-off is the number of honest taxpayers who decided NOT to take a year of to travel because they couldn't afford the stamp duty impact. Your friend made her decision and then expects the state to accomodate her decision by changing the tax laws to suit her. That's not the way the system works, I'm afraid.

Anyway, just wait until her tenant claims tax relief from Revenue - Your friend might have a nasty shock awaiting her on her return.


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## bb1

It's rented to non-nationals and she knocked more than enough off the rent to cover their benefit if they claimed rent allowance.

I'm not saying I agree with what she did, but I can understand where she is coming from, it's not like she's this landlord with a big portfolio of houses, she's covering her mortgage payments and that's all. I just think Revenue could be more accommodating of circumstances like this, fair enough if a person has 2nd house, but other circumstances such as a recent poster who moved out because they couldn't afford the mortgage for a year it is understandable why they would chance this tax evasion tactic. I know ye (moderators) won't agree but they are hundreds out there who are in similar positions & are chancing doing the same thing, not that this makes it the right thing to do.


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## RainyDay

Hi BB1 - I hope she know that it doesn't matter how much she knocks off the rent. They are still entitled to claim the small tax relief that is available, and they will give her name address to Revenue when they do so. They can make this claim anytime up to 7 years after the start of renting (I think), so her nasty surprise could come way down the line.

The point of 'only covering her mortgage payments' make is sound like she is just keeping her head above water. Part of her mortgage payment is a capital repayment, so she is evading tax in order to reduce her debts with the bank. It's not like she comes out 'status quo' at the end of the period - she comes out ahead, and you & me & other compliant taxpayers have paid the price.

And btw, it's not just the moderators on this site who have objected to similar forms of tax evasion in the the past. Many other posters have raised similar objections.


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## quarterfloun

Clubman....

Have you a crystal ball?

 "and _CGT o_n part of the eventual resale gain"

Property prices could fall as well. Would the Revenue be so kind hearted to issue a refund then....?


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## ClubMan

quarterfloun said:
			
		

> Clubman....
> 
> Have you a crystal ball?
> 
> "and _CGT o_n part of the eventual resale gain"


_ "... if any"_. Happy now?



> Property prices could fall as well. Would the Revenue be so kind hearted to issue a refund then....?


No - but they would allow the compliant taxpayer to carry capital losses forward indefinitely to be offset against subsequent capital gains.


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## Eurofan

bb1 said:
			
		

> I'm not saying I agree with what she did, but I can understand where she is coming from, it's not like she's ....



This is part of the problem to be honest. "Ah sure it's only a _little_ tax evasion, it's not like I'm (insert relevant comparison here)".

It's an attitude that pervades Irish society at every level I'm sorry to say.


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## Glenbhoy

In fairness the lady in the example need not be actually evading 3 taxes.  If she had informed the revenue of her current status and paid up the stamp duty clawback, she would then be entitled to deduct the interest from the rent, this would probably result in little or no profits taxable, which given her current status would probably be covered by her tax credits.
In addition, if the revenue were to apply the clawback in a sensible way, ie a pro-rata clawback, I am quite sure more persons would be compliant! (I know that's not the point, but people are normally more willing to pay a tax which they perceive to be fair).
One other point, could this be a little bit of misinformation fed by the revenue to the press in order to boost compliance?  I agree with Stuart though, that if the revenue were ever to get their house in order and have a fully integrated IT system (any offers D&T), it would be incredibly easy to catch the evaders!


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## badabing

If you are going travelling for a year, the best thing to do is go in summer so you straddle 2 tax years, since you are travelling and not domiciled anywhere else, you are still living there, that way you can legally earn over 14k tax and stamp suty free by renting a room in your house. You also maximise your paye tax savings if you are a top rate tax payer by straddling 2 tax years


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## CCOVICH

badabing said:
			
		

> If you are going travelling for a year, the best thing to do is go in summer so you straddle 2 tax years, since you are travelling and not domiciled anywhere else, you are still living there, that way you can legally earn over 14k tax and stamp suty free by renting a room in your house. You also maximise your paye tax savings if you are a top rate tax payer by straddling 2 tax years


 
You have to occupy the house in order to avail of the rent a room scheme as far as I am aware (I asked the question on this site before).  Residence and domicile have no impact in this regard.


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## Glenbhoy

What is the rationale behind having to occupy the house?  This is probably in order to stop persons with more than one property  abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean?  If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!


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## RainyDay

Glenbhoy said:
			
		

> One other point, could this be a little bit of misinformation fed by the revenue to the press in order to boost compliance?  I agree with Stuart though, that if the revenue were ever to get their house in order and have a fully integrated IT system (any offers D&T), it would be incredibly easy to catch the evaders!


It's happening today -  beat D&T for this one.


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## badabing

Glenbhoy said:
			
		

> What is the rationale behind having to occupy the house? This is probably in order to stop persons with more than one property abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean? If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!


 
Absolutely, it would be impossible to construct an arguement otherwise. If you go on holidays for a while you don't change from being an owner occupier even though you don't occupy the house at the time. Who sets the time limit on this? You still officially occupy the house while on an extended holiday


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## RainyDay

badabing said:
			
		

> Absolutely, it would be impossible to construct an arguement otherwise. If you go on holidays for a while you don't change from being an owner occupier even though you don't occupy the house at the time. Who sets the time limit on this? You still officially occupy the house while on an extended holiday





			
				Glenbhoy said:
			
		

> What is the rationale behind having to occupy the house?  This is probably in order to stop persons with more than one property  abusing the system, but to apply it to this example seems unfair, and I don't see how this can be enforced, what does occupy mean?  If letters are still delivered there, the bills are in the owner's name, this would seem virtually uneforceable and I think you could definitely challenge any revenue decision here and win!



I'm always amazed at these broad, assumptions/claims that you can 'beat the system' which have no basis in fact or experience. Do you really think the guys in Revenue are that dumb? Do you think you're the first genius to try to scam the system by producing some old bills?

It would be very foolish to proceed on the basis that you're going to be the one to 'beat the system'.


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## badabing

RainyDay said:
			
		

> I'm always amazed at these broad, assumptions/claims that you can 'beat the system' which have no basis in fact or experience. Do you really think the guys in Revenue are that dumb? Do you think you're the first genius to try to scam the system by producing some old bills?
> 
> It would be very foolish to proceed on the basis that you're going to be the one to 'beat the system'.


 
No-one is suggetsing beating the system, just using it to your advantage. I omitted some important points earlier.

You must not rent the house out wholly. You can rent a maximum of 2 rooms and must keep a room for yourself at all times. If you are under the annual rent a room income limit and do not take up residence elsewhere, I fail to see how this can be viewed as tax evasion when all you are doing is taking an extended holiday


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## RainyDay

badabing said:
			
		

> do not take up residence elsewhere, I fail to see how this can be viewed as tax evasion when all you are doing is taking an extended holiday


So let's pretend that I'm the Revenue inspector.

So how long was the holiday for, Mr Bing? So where were you resident for this period, Mr Bing? So did you fund the holiday, given your modest taxable income, Mr Bing? So can I see your credit card statements showing your holiday spending, Mr Bing?


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## Glenbhoy

I agree completely with badabing, it's not about beating the system in this case, it's more like natural justice.  In the example above, a person had one property in this country, she went away for a year and rented some rooms in the property to cover the mortgage (may even have changed it to interest only).  Why should she have to repay her stamp duty when she intends to re-occupy the property?  As pointed out previously, what timescale determines non-occupation?  I know a number of people who took 3 months to visit NZ for the Lions tour, some of them rented their apartments while gone, technically they were in breach of the legislation too, but I douubt if any court would back the revenue on this one (since the lads probably ended up drinking with judges in NZ at some point).


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## RainyDay

I don't see how allowing one person to evade tax is considered 'natural justice' - How is this just for the bulk of compliant taxpayers who paid their due taxes.

In relation to a 3 month rental, I'd be surprised if Revenue and/or any court would be aggresively chasing down such cases. But the law is the law. If it's unjust, then start working to get the law changed - don't take it into your own hands.


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## ubiquitous

There is at the very least, a very arguable case that a person's residence remains their "principal private residence" even if they are not living there for a period, once of course they haven't set up permanent residence elsewhere in the meantime.

In the case of a backpacking or gap-year holidaymaker, it would be rather difficult for the Revenue to demonstrate that the principal private residence of individual concerned had changed from one address to another within the time spent abroad. 

This might not be the case if the individual had set up some sort of permanent or semi-permanent accommodation abroad in the course of their travels, and if this accommodation was of such a nature that a reasonable person would conclude that the it had now replaced their Irish address as the person's "home" - for example an Irish person who decamps from Dublin to a holiday home in Alicante and remains there for a period of several months or a year without returning.

However, in practice I can't really think of any scenario see how this would affect backpackers or gap-year travellers. That is why I think that the person about whom this discussion was started should have no need to worry about their eligibility for either the stamp duty exemption or the rent-a-room scheme. That said, until and unless someone goes to the trouble of researching the legal issues (including the definition of 'principal private residence') in detail, they could not be 100% certain that my understanding would be correct. In the meantime, talk of "tax evasion" in cases like this is very wide of the mark as there is genuine doubt as to whether the law is being broken or not. 

(By the way, unless they have other reasons to suspect tax evasion in specific cases, I couldn't imagine the Revenue getting hot and bothered about how a student, for example, could manage garner the funds to maintain themselves on a 12 or 15 month round the world trip, given the obvious fact that most people in that position supplement their funds by getting casual work along the way.)


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## Marie

ubiquitous said:
			
		

> (By the way, unless they have other reasons to suspect tax evasion in specific cases, I couldn't imagine the Revenue getting hot and bothered about how a student, for example, could manage garner the funds to maintain themselves on a 12 or 15 month round the world trip, given the obvious fact that most people in that position supplement their funds by getting casual work along the way.)


 
Or to push imagination even further, how any individual can engage in the substantial financial commitments around purchasing 'a home' and immediately leave for an _unremunerated_ extended period abroad!  We're talking serious wealth here, and not a penny-piece in taxes.  I think this is what a number of posters are picking up.


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## Marie

bb1 said:
			
		

> It's rented to non-nationals and she knocked more than enough off the rent to cover their benefit if they claimed rent allowance.
> 
> I'm not saying I agree with what she did, but I can understand where she is coming from, it's not like she's this landlord with a big portfolio of houses, she's covering her mortgage payments and that's all. I just think Revenue could be more accommodating of circumstances like this, fair enough if a person has 2nd house, but other circumstances such as a recent poster who moved out because they couldn't afford the mortgage for a year it is understandable why they would chance this tax evasion tactic.


 
Then presumably yourself and your friend would not "mind" if in these circumstances additional deducations were made from your earnings for (a) roads (b) sewage treatment (b) transport infrastructure (c) policing (d) refuse collection and treatment (e) schools (f) everything else that goes into urban infrastructure?................because that's the purpose of taxation!  Whether your friend is at home or abroad her property depends on and benefits from all of this.


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## ubiquitous

Marie,
your comments above are predicated on the assumption that the case we are discussing involves tax evasion (ie illegitimate use of the rent-a-room scheme).  For the reasons I set out above, it is extremely doubtful that this is the case, and it is indeed quite probable that the people who use the rent-a-room scheme to finance gap-year travel are acting fully within the spirit and the letter of the tax laws in doing so. 

On that basis, I think it is a bit much to lecture bb1 on their friend's tax obligations. Nobody is obliged to pay any more tax than what the law compels them to pay. If some people are able to finance time off by making clever (but seemingly legitimate) use of a generous tax break such as the RAR scheme, then why the jealousy?


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## Marie

Ubiquitous - Before your introduction of the allegation of "jealousy" against myself drags this thread towards farce, doldrums or closure it might be appropriate to return to the excerpt from ClubMan with which it began.  The news item informs that "Revenue are clamping down on people who buy property, avail of the tax concessions applicable to a PPR and then "do not live there".  The _reasons_ why they do not live there are - I respectfully suggest - irrelevant!

The broad (non-jealous)  point I made is that taxes - including the taxes under discussion here - support urban and social infrastructure.  They are not "optional".  There can be no equitable system if some individuals or groups set out to circumvent contributing their reasonable share towards those systems.  By so doing they overtly engineer the uptake of their responsibilities by others.

There are _dozens_ of unique legitimate reasons - financial, domestic, personal, dispositional - why someone who buys a house to live in does not subsequently do so for a number of years.  The taxation system is based on a clear divide between owner-occupiers and investors.  There _is no intermediate status_ and these two categories are mutually exclusive.  

This debate appears to be between those who accept "the system" and bear their financial responsibilities as participants - however onerous - and those who feel that "the system" is for _others_ and they themselves should be treated as exceptions.  Take a young unmarried couple each of whom has bought "a PPR" in their own name, rent both out on the q.t. whilst they live in a rented appartment in - say - Dublin for 6 months of the year, spending the rest of the time in their Spanish villa (jointly purchased as a PPR) and let "informally" to friends and extended family the rest of the year.  That is _not_ behaviour to envy, rather to deplore!


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## ubiquitous

> The taxation system is based on a clear divide between owner-occupiers and investors. There is no intermediate status and these two categories are mutually exclusive.



Hi Marie 
I would beg to differ with you on this. There are many scenarios and issues in relation to which our tax tax laws are not "black and white", mainly as a result of the fact that the law tends to be a mixture of legislation and judge-made law. 

In the context of the specific scenario which we are discussing here, it is simply incorrect and misleading to say that "The taxation system is based on a clear divide between owner-occupiers and investors. There is no intermediate status and these two categories are mutually exclusive"

If you can back up this statement with appropriate legislative and case law references to support your argument, that would be great.


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## Marie

ubiquitous said:
			
		

> Hi Marie
> I would beg to differ with you on this. There are many scenarios and issues in relation to which our tax tax laws are not "black and white", mainly as a result of the fact that the law tends to be a mixture of legislation and judge-made law.
> 
> In the context of the specific scenario which we are discussing here, it is simply incorrect and misleading to say that "The taxation system is based on a clear divide between owner-occupiers and investors.


 
HUH!  Either a property is an individual's "principal private residence" or it is not!  Either it is the buyer's _home_ or it is _not_ a "home" but "something else".  There are _two categories - _owner-occupied OR investment.

Regarding my observation that the taxation system is based on a clear divide between owner-occupied and investment, the dogs in the street are barking this.  The fact that some individuals blur the boundaries and provide themselves with fiscal and/or legal loopholes is neither here nor there.  I have a number of friends and acquaintances in various parts of Europe including Ireland who play fast and loose and get support from solicitors and lawyers when things get sticky but that doesn't alter the fundamental structure.


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## stuart

Marie said:
			
		

> Regarding my observation that the taxation system is based on a clear divide between owner-occupied and investment, the dogs in the street are barking this.


 
Ubiquitous asked had you any factual reason to assert that this was the case. The Taxes Consolidation Act 1997, the last time I checked, has 1,518 pages in it

And I would not pretend to know it inside out but I am certain that the "dogs in the street" are not mentioned once as being able to make any rulings in relation to tax issues


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## eliza

ubiquitous said:
			
		

> Marie,
> It is indeed quite probable that the people who use the rent-a-room scheme to finance gap-year travel are acting fully within the spirit and the letter of the tax laws in doing so.



I think ubiquitous is making a very important point here. Basically, unless the person on the gap-year actually establishes residence elsewhere, that person probably remains a resident of Ireland. However, it is a very complex area of law and is by no means 'black-and-white'.


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## ubiquitous

> Basically, unless the person on the gap-year actually establishes residence elsewhere, that person probably remains a resident of Ireland.


...and, by extension, of their own home.



> However, it is a very complex area of law and is by no means 'black-and-white'.


exactly.


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## Marie

_The Revenue Commissioners are cracking down on buyers of new houses and apartments who do not pay stamp duty.

The officers are checking whether buyers are living in the properties. Owner-occupiers who buy a new property do not have to pay stamp duty, but they must continue to live in the property, otherwise they are regarded as investors.

Investors who avoid stamp duty, by claiming to be owner-occupiers and then renting out the property, could be hit with a double tax bill - the unpaid stamp duty plus tax due on any rent paid._

(originally posted by ClubMan)

I must have been dozing!  Can someone clarify how the above quote connects with general complacency and agreement that students on gap-year travelling have not an established domicile outside the RoI?

As you say - there are thousands of pages.

As I say - there are two categories of ownership for taxation purposes; your residence (your "address") and all others are investment properties.

As half-a-dozen other posters say - an unknown but probably significantly large number of individuals are not paying appropriate taxes on properties they own which are lived in by others.

So let the great Irish public go on niggling about the equivalent of how many angels can dance on the head of a pin whilst ignoring social justice, the law of the land and requisite personal and busines ethics.  Instead nail the occasional token politician for corruption.

Good news the Revenue is refining its detection systems.


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## ubiquitous

Hi Marie

It is a mistake to treat the word of any newspaper (including the Sunday Business Post) as gospel when it comes to technical tax or law issues, simply because newspapers tend to take a simplistic interpretation of the law as it pertains to matters under discussion. The SBP may be reasonably accurate in saying that "owner-occupiers who buy a new property...must continue to live in the property, otherwise they are regarded as investors", however this interpretation is a long way from being 100% accurate - for a start, several explicit exceptions to this principle are explicitly noted in the Taxes Consolidation Acts.

If the Revenue and or the State criminal law enforcement agencies decide to punish someone for failure to comply with the Taxes Acts, they use the Taxes Acts ("the law of the land" which you evidently hold so dear) as the reference point in doing so - not a quick-fire summary of the law that appears in some news article.

By the way, you cite the issue of social justice. Where is the social justice in a young person, who has been enterprising and self-reliant enough to buy their own property, being subjected to huge tax and stamp duty penalties for having the audacity to travel around the world for 6 months or so? Do you really think that the Dept of Finance would have framed the law in order to punish these youngsters in this way - effectively prohibiting them from seeing the world and having a bit of harmless fun before they settle down? Unless we are back in the era of John Charles McQuaid, I cannot imagine that they would have done so.


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## Janet

ubiquitous said:
			
		

> Hi Marie
> 
> By the way, you cite the issue of social justice. Where is the social justice in a young person, who has been enterprising and self-reliant enough to buy their own property, being subjected to huge tax and stamp duty penalties for having the audacity to travel around the world for 6 months or so? Do you really think that the Dept of Finance would have framed the law in order to punish these youngsters in this way - effectively prohibiting them from seeing the world and having a bit of harmless fun before they settle down? Unless we are back in the era of John Charles McQuaid, I cannot imagine that they would have done so.



Just one point here - while I know most people want to get on the property ladder quickly before property gets even more expensive I don't accept that they should then be able to go off travelling (even given that travelling will usually broaden the mind etc. and in the long run potentially make such people capable of making an even bigger contribution in overall terms to this country.  Now that could be an interesting topic to start!) the world and not accept the responsibility they have taken on.  As you say ubiqitous, why stop them having fun before they settle down?  I think the point to remember is that by buying a house settling down is effectively what they have chosen to do when they chose to take on the responsibility of a mortgage and owning a property.  If they cannot afford to travel as well as accept the tax burden incurred by leaving their prinicipal residence in order to do so, then maybe they should travel first and then settle down.  Actually if the property market weren't so mad in Ireland I'd be inclined to argue this point very strongly but I do understand the desire to get a place of your own as soon as possible before being entirely priced out of the market.  I don't know all the ins and outs of the Taxes Consolidation Act or the Finance Act etc but as so-called "gap-year" travelling (I think rarely actually done by students anymore, usually people who have worked a few years) is now so commonplace perhaps we need to have a change in tax law to allow for that.  (Okay, one point, but it was a long one in the end, sorry for rambling folks).

PS Disclaimer: I can not afford to buy any property, nor can I afford to travel anymore (all of this my own fault through really bad financial management) so it's possible I may be a teeny bit prejudiced in my view of people who are doing both


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## ubiquitous

> as so-called "gap-year" travelling (I think rarely actually done by students anymore, usually people who have worked a few years) is now so commonplace perhaps we need to have a change in tax law to allow for that.



If the Revenue were to pursue gap-year backpackers for taxes and stamp duties on the basis that they were now "landlords" of their own homes, I have no doubt but that there would be an immediate political clamour for the Minister for Finance to immediately change the law. In any event, I don't think this will happen as the law on PPR as it stands appears to be on the side of the backpacker/householder.


----------



## Glenbhoy

Janet, 

I think you are being a bit harsh there, surely people do not have to adhere to a set order in living their life.  It's not a case of I've got a house, so I must get married and have kids.....


----------



## Janet

No, not at all - in fact I'm not a terribly conventional person myself.  But if you are buying a house then that comes with a certain amount of responsibility and I think that if buying a house is something you decide to do with your life you have to take the bad with the good.  If you've bought a house and can still afford to go travelling fair play.  If you've bought a house then want to go travelling and effectively use tax evasion to finance your travelling (stating it a bit harshly here just to make the point) then I don't think that's right.  Owning property is not a right, it's a choice.  Sometimes making one choice cuts down on the possibility of other choices in life - and that's life as they say.


----------



## ubiquitous

Hi Janet

That's a big if...


----------



## dam099

Janet said:
			
		

> If you've bought a house then want to go travelling and effectively use tax evasion to finance your travelling (stating it a bit harshly here just to make the point) then I don't think that's right. Owning property is not a right, it's a choice. Sometimes making one choice cuts down on the possibility of other choices in life - and that's life as they say.


 
I think the point is though that the law is unclear enough that it might not be tax evasion. 

Ubiquitous made a point about the letter and _spirit_ of the law earlier which I think raises an interesting point. The five year clawback was likely put in to stop investors from buying a property and living in it for a nominal amount of time so as to avail of the stamp duty relief. I think it is pretty obvious the intent is to stop abuse of the system by professional investors. The question is did the drafters of the law really intend someone who travels temporarily to be regarded as an investor. One could maybe argue that if they had they could have included an exemption for 6-12 months abscence not triggering the clawback but this may just have been an oversight.


----------



## Glenbhoy

Good post Dam099, thats what I was trying to say all those post ago, but unfortunately lacked your eloquence!!
One thing though, whilst we may say the lack of concession was probably an oversight, that does not mean they will be in a hurry to rectify this, more tax is always good news for the dept. of finance.


----------



## Marie

_"Roads, traffic-lights, sea and mountain rescue, schools and teacher-training, sewage-systems, government and local infrastructure, sea-defences, police, hospitals and training of medical personnel, hospices and hostels, emergency services (fire, ambulance) should be supported by other peoples' taxes!  Personally I will ensure  "the state" doesn't get hold of my money which I need all of for myself as I want to invest in properties and enjoy life to the full in the sun"._


Yeah!  That's catching on, all right! It's going to be an 'interesting' spectacle 10 - 15 years from now when the chickens of that particular approach to public and private finance come home to roost.


----------



## Marie

Janet said:
			
		

> If you've bought a house then want to go travelling and effectively use tax evasion to finance your travelling (stating it a bit harshly here just to make the point) then I don't think that's right. Owning property is not a right, it's a choice. Sometimes making one choice cuts down on the possibility of other choices in life - and that's life as they say.


 
Very well said Janet........and I don't think you are "stating it a bit harshly".....you are just cutting through the crap!


----------



## Marie

ubiquitous said:
			
		

> Hi Marie
> 
> 
> By the way, you cite the issue of social justice. Where is the social justice in a young person, who has been enterprising and self-reliant enough to buy their own property, being subjected to huge tax and stamp duty penalties for having the audacity to travel around the world for 6 months or so? Do you really think that the Dept of Finance would have framed the law in order to punish these youngsters in this way - effectively prohibiting them from seeing the world and having a bit of harmless fun before they settle down? Unless we are back in the era of John Charles McQuaid, I cannot imagine that they would have done so.


 
Ubiquitous - I have been trying (for reasons I gave in a much earlier post) to avoid focussing down this discussion to what must be a very very small number of individuals........those able to take and travel during 'gap year' from higher/further education. These days the costs entailed in pursuing a university education are so large few can now afford 'gap years' - let alone gap year spent abroad!  To take up your defence of 'a young person who has been enterprising and self-reliant enough to buy their own property', our difference seems to be that you interpret that young person's liability and responsibility to pay their due fair of taxes (like the rest of us!) as _*"subjected to huge tax and stamp duty penalties".   *_

That is the nub of the matter!  They are simply expected to meet their responsibilities like every other property owner or mortgagee, but _your_ view of this is that the young person is being "penalised".  They are not! They are being expected to meet their responsibilities (I can't use the word 'social' or 'civic' in that context, knowing your extreme reaction to these old-fashioned values).

Have a nice day now!


----------



## ubiquitous

Marie 

I honestly don't know what you are talking about. 

Contrary to what you say, I am *not* talking about students. - How many students own houses anyway?

What we are talking about here is a matter of law. I have explained, in straightforward, simple terms, my reasoning of what the law says. You have disagreed, which is your right, but in doing so have made some statements that are clearly untrue. When challenged, you have failed to acknowledge this and failed to justify your position with a shred of evidence, preferring instead to moralise to others about 'meeting their responsiblities' and suchlike. 

You have also chosen to comment negatively and repeatedly on my own and others' motivation for stating the case as we see it. Now you are starting to attack me, and presumably the others who contributed here, eg " I can't use the word 'social' or 'civic' in that context, knowing your extreme reaction to these old-fashioned values."

Sadly, there is little point in trying to reason with you on this...


----------



## trouble

Has the revenue setup up a phone line/special service/... to report people who are evading stamp duty?

That would help them in their investigation, and it will be quicker to retrieve the unpaid monies..


----------



## Janet

ubiquitous said:
			
		

> Marie
> 
> I honestly don't know what you are talking about.
> 
> Contrary to what you say, I am *not* talking about students. - How many students own houses anyway?



I think this confusion arises from Marie having lived in UK where gap-year travelling is something students do, I think between school and uni or else during uni - literally taking a year out to travel and leaving a gap in continuous education.  As far as I know anyway that's the case but the phrase has been taken up over here to some extent to describe the droves of people who've worked for a few years and then decide to head off (usually to Australia) for 12 - 18 months.



			
				ubiquitous said:
			
		

> What we are talking about here is a matter of law. I have explained, in straightforward, simple terms, my reasoning of what the law says. You have disagreed, which is your right, but in doing so have made some statements that are clearly untrue. When challenged, you have failed to acknowledge this and failed to justify your position with a shred of evidence, preferring instead to moralise to others about 'meeting their responsiblities' and suchlike.
> 
> .



What statements are clearly untrue?  Not trying to get at you here by picking your post to bits but I've read back through some of the posts and can't see anything that springs out at me as being false.  Reading quickly though so could easily just be missing it.

And finally, what's wrong with moralising about responsibilities?


----------



## ubiquitous

Hi Janet

I don't want to get into the same sort of 'cutting & pasting' row that has dogged some AAM discussions recently, except to say that my 3rd and 5th posts to this thread clearly identify and address the untrue statements to which I refer above.

There is nothing wrong per se in moralising about responsibilities, but I would respectfully suggest that Marie is in no position to moralise here as she obviously has an incomplete and apparently incorrect understanding of whether there is any tax liability in the first instance. She is equally in no position to dismiss the integrity and bona fides of myself and others simply because our understanding of the issue varies from her own.


----------



## Janet

ubiquitous said:
			
		

> Hi Janet
> 
> I don't want to get into the same sort of 'cutting & pasting' row that has dogged some AAM discussions recently, except to say that my 3rd and 5th posts to this thread clearly identify and address the untrue statements to which I refer above.



Sorry, have only just figured out how to do the cutting & pasting thing properly so am getting very enthusiastic about it 

Off to re-read those posts now, thanks.


----------



## rubberduckey

Hi, I am following this thread with great interest as it applies to my situation right now!!!

And i'd really appreciated if someone could answer my question.

We are home owners for 18 months, who are taking 6 months off work in mid-November, doing some charity work in Sri Lanka for a few weeks, going to my brothers wedding in Australia etc etc. In other words we will never be in one place for more than 3 weeks.

Our plan is to register for the 'Rent a Room' scheme and declare all rental income. By the way this rental income will only cover 2/3's of our mortgage.

However we have not legislated for stamp duty clawback.

Can anyone tell me the 'legal' requirement for a property to no longer be classified as a 'PPR'??

thanks in advance,

P


----------



## Glenbhoy

Maybe you can be our test case rubber duckey!!
Certainly a group of us feel that even though you are now abnegating your responsibilities (allbeit for a short time), the stamp duty clawback does not apply to you, others don't agree.
Personally I would enjoy my trip and say nothing


----------



## ubiquitous

A new landmark tax case in 2006, The Collector General v Rubber Duckey...?

Can't Wait!!!


----------



## rubberduckey

Thanks Glenboy.

On a more somber note, i do take my responsibilities to the state quite seriously and do not want to break any tax legislation.

Can anyone on the forum or revenue tell me where the line is.

1. If i go on a 4 week holiday to Italy am i liable for stamp duty clawback,all the time returning to my original home in Dublin??

2. If i go on a 3 moth jolly to New Zealand to follow the lions rugby tour am I liable for stamp duty clawbank, all the time returning to my original home in Dublin??

3.If i go on a tour round the world for 6 months, never staying in one country for more than 3 weeks, am I liable for stamp duty clawbank, all the time returning to my original home in Dublin??


i guess this is the crux of the issue, advise would be most appreciated.


thanks,

P


----------



## Janet

I think one important factor to add to the length of time abroad (I think this is mentioned above somewhere) is whether or not you keep a room in the property for your own use during the time away.


----------



## ClubMan

rubberduckey said:
			
		

> Thanks Glenboy.
> 
> On a more somber note, i do take my responsibilities to the state quite seriously and do not want to break any tax legislation.
> 
> Can anyone on the forum or revenue tell me where the line is.
> 
> 1. If i go on a 4 week holiday to Italy am i liable for stamp duty clawback,all the time returning to my original home in Dublin??
> 
> 2. If i go on a 3 moth jolly to New Zealand to follow the lions rugby tour am I liable for stamp duty clawbank, all the time returning to my original home in Dublin??
> 
> 3.If i go on a tour round the world for 6 months, never staying in one country for more than 3 weeks, am I liable for stamp duty clawbank, all the time returning to my original home in Dublin??
> 
> 
> i guess this is the crux of the issue, advise would be most appreciated.
> 
> 
> thanks,
> 
> P


I've trawled the _Revenue _site in detail looking for clarification in relation to how long an absence abroad and for what purposes is "exempted" in terms of the determining whether or not a property remains one's _PPR _but to no avail. Even the tax briefings don't seem to clarify this point. I guess that the only option is to ask _Revenue _directly and/or seek independent, professional opinion on the matter from a tax expert?


----------



## CCOVICH

I would agree with ClubMan-and calling the Revenue would cost you nothing (except meybe the price of the phone call).

I would suspect that a lot of it comes down to what you are doing while you are abroad-pure travelling would mean that you would probably be in a hotel or campsite etc., while if you were working you would have some form of more fixed abode (temporary residence).  I also think that the spirit vs. letter of the law would have to come into play at some point.


----------



## jonny

Does anyone know how soon you need to move in to be considered an owner occupier?

I am currently living outside Ireland and have been for over 3 years (and am therefore non-resident & ordinarily non-resident for tax purposes.) 

I am buying a new house under 125sq metres (and am also a FTB) and it is due to complete some time in December. I will be moving back to Ireland permanently next September (2006) and will be moving in at that time with the intention of remaining in it for the forseeable future.

I will not be renting it out at all before this time and will likely take my time finishing it off in terms of putting down flooring, installing appliances and buying furniture probably waiting until I move back in September to do most of it. For now I intend to put an alarm on it, some curtains on the windows so it looks less obviously unoccupied and a sofa-bed to sleep on for the one or two short trips home I plan to make before moving back permanently in September. I will connect the ESB & Gas (in my own name) to dry it out and keep it dry and for heat/light when I am home on my short trips.

My solicitor seems to think I will not have to pay stamp duty but is there any danger I might be regarded as an investor or non owner-occupier? If Revenue are doing spot checks I likely won't be there to take their call (although I will be having a friend check my mail occasionally if they write).


----------



## ClubMan

If you are not renting the property out and are still getting work done on it in preparation for moving in then I would not see any problem in terms of it being declared an investment property. However I am not a tax expert and if in doubt at least ask _Revenue _and maybe even consider getting independent, professional advice.


----------



## rubberduckey

Thanks for the respnses.

i will ring revenue in the morning to try and find out  about length of holiday etc.

Will update this thread with the response.

Thanks,

P


----------



## WaterSprite

This is a fascinating thread.  I don't have the bottom-line answer, but do have some comments (and apologies for the long post):

The key question is whether or not our travelling friend is evading any taxes that *should, legally, be paid*.  We are not actually given enough information to make this assessement, but I am assuming that (i) she is travelling for a year, which may or may not span two tax years, the result of which may be that she is not tax-resident in Ireland for one particular year (ii) she will not be in any other country for longer than 183 days (also assuming that other countries have similar residence requirements to Ireland) and (iii) she is renting out her entire house for more than €7,620 per annum (i.e. she is receiving more than €7,620 in respect of one or more tax years)

If there is a legal obligation to pay tax and she is not actually paying that tax, then and only then can there be any question of legal or moral obligation.  Neither Ubiquitous nor badabing has suggested that it would be morally "ok" for our backpacker to actually evade taxes - but we only get to this question *if* there is a law requiring her to pay such taxes.  If there is no legal obligation to pay taxes then I think she is perfectly free to take off and travel to her heart's content and I hope she has a great time of it.  

Having said that, have a look at:



Which says:

"A first-time buyer is defined as a person (or where there is more 		  than one buyer, each person):

Who has not on any previous occasion, either individually or 			 jointly, purchased or built on his/her own behalf a house in Ireland or abroad;
Where the property purchased is occupied by the purchaser or 			 a person on his/her behalf as his/her only or principal place of residence 			 and
Where no rent is derived from the property for five years 			 after completion of the current purchase.*
   	  *If the first-time  buyer *rents* the house within five years Revenue will claim back or 'clawback' the difference between the higher stamp duty rates and the duty actually paid. The only exception to this is the 'Rent a Room' scheme where part of the house is rented out. If the house is *sold* within five years there is _no_ clawback."


Now I am a lawyer, but not a tax lawyer.  My interpretation of the above statement coupled with my initial assumptions leads me to believe that she is, in fact, evading taxes.  The problem arises, however, not from her residence or the fact that she is not in the country, but the fact that she will be netting more than €7620 in rent.  


If her house remains her principal OR only place of residence, then she remains within the FTB stamp duty exception.  I don't believe that "residence" in this context is based on the 183-day rule.  For example, there are lots of people who travel on various business trips for more than 183 days in total, but I do not believe that anyone could argue that, when they come home to the same house each time they return, that house is not their residence.  Note that I am assuming in this case, and in the case of our backpacker, that these people have not stayed in any one country or location for long enough to be deemed to be "resident" in that country (under any definition of "residence", including the 183-day rule).


Her problem, as I see it, is that, according to my assumptions, she is receiving more than €7,620 in any one tax year for renting out a room, or rooms, in her home.  From the Revenue wording, the rules seem black and white - if you receive more money than that, not only is the rent taxable but you ALSO lose out on 100% of the FTB benefits as regards stamp duty.  So if you get €7,621 in any one year, then you lose all of the benefits of your reduced stamp duty.  Bear in mind also though that this is an annual figure: you could rent out a double room in your 2-bed house for 6 months for 1270 per month in one tax year and do the same in the following tax year and, if you didn't receive any other rental income from that house, you would still fall into the terms of the Rent a Room Scheme.  This is not tax evasion, no more than is claiming a refund for income tax paid in a year where you were non-resident in Ireland.


I am interested to see what the Revenue actually says about this - the above reasoning is merely my personal interpretation of the government-supplied material.


Sprite


----------



## CCOVICH

That's a well-informed and interesting post WaterSprite.


----------



## Mellow

Hi Guys - below answer I got from the revenue when I asked the question about utilising the rent a room scheme while myself and partner take year off to travel:

"Revenue Dublin South County PAYE" <SouthCountyPAYE@revenue.ie> wrote:

To qualify for rent-a-room relief one of the conditions is that the
residence
must be occupied by the person receiving the rent as his or her sole main
residence.If you are abroad you do not qualify for this relief because you
would not be occupying the property. 
In respect of Capital Gains Tax Section 604 (3) states that the gain shall
not be chargeable gain if the dwelling house or the part of the dwelling
house has been occupied by the individual as his or her only main residence
throughout the period of ownership or throughout the period of ownership
except for all or any part of the last 12 months of that period.
It also states that any period of absence not exceeding 4 years where as a
condition of your employment you are obliged to work abroad .A period of
absence will only be ignored under the above rules if both before and after
the total period of absence the house was occupied by the individual as
his/her principal private residence and throughout which he/she had no
residence or main residence eligible for relief.
Maybe these conditions may help.

Regards 

CCorcoran
Customer Services 


)


*************************************

This e-mail has been received by the Revenue Internet e-mail service.

*************************************


Dear C Corcoran,

Thank you for the quick reply.

Can you please advise the criteria used to assess points 1 to 5.

Need to know this because if we are not deemed suitable to have utilised
the
rent-a-room scheme after we come back, we will have rental income tax,
stamp
duty and capital gains tax implications. So if you advise the criteria for
1
to 5 below, I can make sure that we abide by that criteria.

Thanks for your help.

Kind regards,

Catherine


"Revenue Dublin South County PAYE" <SouthCountyPAYE@revenue.ie> wrote:

> 
> 
> 
> Hi,
> 
> If you refer to tax leaflet IT70 section re rent-a-room-relief it states

> that
> ;
> 
> A "qualifying residence" is a residential premises in the State, which is
> occupied by an individual as his/her principal private residence during
the
> year of assessment.
> 
> To enable us to determine if you qualify for rent-a room-relief we would
> require after the 31st December 2006 or on your return to this country
> 1. details of any foreign income received by yourself
> 2. what countries you had visited
> 3. exact period you were away
> 4. if you own property abroad
> 5. exact dates that you occupied your property here
> 
> Any query on your SSIA you should contact SSIA section,Limerick, e
> mail;www.trsadmin@revenue.ie=0D
> 
> CCorcoran
> Customer Services=0D


----------



## shnaek

This is indeed an interesting debate. From my point of view I cannot see why the issue of stamp duty claw back arises at all. Surely the point of stamp duty relief was to make it easier for someone to buy their first home. What does it matter what you do with it? You have your first home, well done, case closed. 

The fact that the effect the stupid piece of legislation had was to push up prices does not escape me either, nor anyone else who has been observing the property market. So we all pay higher taxes anyway when we buy a house, as the prices have been forced up. If the revenue had left things as they were house prices would be cheaper (a little anyway  ) and there would be no need for this debate, or for wasting revenues time chasing up nonsense like this when there is serious evasion going on out there.

(PS someone is going to say all evasion is serious yada yada yada - yes, that is true. But we never needed to create this situation in the first place. Pure short sightedness again the culprit)


----------



## dam099

shnaek said:
			
		

> This is indeed an interesting debate. From my point of view I cannot see why the issue of stamp duty claw back arises at all. Surely the point of stamp duty relief was to make it easier for someone to buy their first home. What does it matter what you do with it? You have your first home, well done, case closed.


 
Its to give owner occupiers an edge over people who are really investors but might seek to avoid the stamp duty by pretending to occupy for a nominal amount of time.


----------



## Paulo

Has anybody being through the process of paying SD Clawback ? as I need to do this.

I have recently realised I need to pay this. I paid my rental income taxes as required.

Reading through the SD10 leaflet from the revenue ( [broken link removed] ) , I believe the rate of 5% SD is the one I need to pay is from table 1, as I purchased my house in 2000 for 270K Euro; initially let it in 2002 as I was posted out of the coutry with work and returned in 2004. The rates in table 3 scares me.

Can somebody in the know confirm this ?

Also, who is the professional required to process this ? Tax Accountant ? Solicitor.


----------



## strewth

Hi. could you explain this to me please? I am hoping to go travelling in May for a year. Can I rent out my apartment tax free?


----------



## CCOVICH

strewth said:
			
		

> Hi. could you explain this to me please? I am hoping to go travelling in May for a year. Can I rent out my apartment tax free?


 
Did you read this post?  Did you read any of what has been said in this thread?


----------



## wexford

That girl may also have to repay her first time buyers mortgage interest relief... if a ftb rents out within five years, they lose the their mortgage interest relief entitlement... 


i think legislation should provide for a 12 month break for certain reasons in five years - people want to head off when they are young, healthy and have minimum responsibilities - and i'm told the longer one waits to go, the harder it is... losing one's nerve!


----------



## Shakespeare

Wexford

"Losing" the owner-occupier interest relief does not refer in this instance to a claw-back of what has been claimed. It was claimed when the person was in fact an owner-occupier. What the comment refers to is the inability to continue to claim it when no longer an owner-occupier and instead become an investor in which case you offset the *interest portion* of the mortgage payment (and other exps) against the rental income when calculating the rental profit/loss for tax purposes.

Shakespeare


----------



## Rookieinvest

I was told today that The Sunday business post of the 5th of March had a further article on the Tax authorities updating their systems to cross reference property owners rental returns/mortgage interest relief/number of properties held etc etc in order to catch people who have avoided paying the correct stamp duty on ther house and tax evaders who didn't pay the clawback and people who haven't filed returns. Looked on the website and can't find it - does anyone have access to the link (if it exists)?


----------



## Glenbhoy

Rookie, I think that article was in the Indo/Sindo a few weeks ago - their website is free to browse on.  It basically said the revenue are working on a database which will finally cross reference all data on an individual - or so the theory goes - this is what we all thought they had years ago, until you deal with them and realise their systems can be shambolic.  Whether this comes to fruition soon or not is another matter, but undoubtedly it will arrive within a few years (but then of course the staff will require a massive increase in salaries to operate the system ala the guards PULSE sytem).


----------



## ClubMan

Rookieinvest said:
			
		

> in order to catch people who have avoided paying the correct stamp duty on ther house


Evaded surely?


----------



## Rookieinvest

Sorry Clubman - *evaded,* thanks for the clarification!


----------



## dirtyfingers

just to clarify?

if i don't leave the country, and just stop working - does the same apply????

i.e. - if i'm living in my main residence, renting the other rooms according to the letter of the law, having paid ftb SD rate, getting mortgage interest relief etc. That's all fine, yes?

But....if i leave the country - I suddenly owe stamp duty clawback??

just a real world example:

I live in Cork. I can NOT afford a house in Cork.

If i buy a new house as a FTB in for eg. Limerick, to get on the property ladder and continue to pay rent in another house in Cork, for which I don't claim rent relief. 

I go to Limerick regularly with work, and would use my house on those occasions, while possibly renting the other rooms (never my room).

Is it then fair or justifiable to lose my FTB SD allowance when I don't have another primary residence? When I don't claim rent relief?

I can understand the logic of not being allowed to have both advantages - ie claiming rent relief, AND mortgage interest relief, and FTB rate. But is the core of the FTB sytem not designed to assist and allow first time buyers to purchase a house, and deter investors from pricing them out of the market?


Any ideas?


----------



## JPF

Hi
I am in a situation similar to the one dirtyfingers outlines above. I work in Dublin and return home to Roscommon every weekend. I am thinking of buying a house in my home town ( a new 4 bed semi for 235K) as I see no value in Dublin, 400k+ for a pokey 2 bed town house. I like this particular development and would like to move back from Dublin within the next year or 2.

If I was to the buy the house and rent out 2 or 3 bedrooms keeping one for myself always and staying in the house most weekends would it be classed as my PPR. I would ensure rent was below €7620
I currently rent a shared room in Dublin and stay there only when necessary, even now I would not consider my rented Dublin accommodation as my PPR.
Where would I stand in the eyes of the Revenue as regards "Owner Occupier"??

Any advice ideas would be appreciated.


----------



## Henny Penny

Tax dodgers annoy me ... I live in an area which is full of section 23 type properties. I have no problem with investors buying section 23 properties but it annoys me when people buy them and claim to live in them thereby getting the FTB grant and also the tax relief, and then subsequently rent them out to tenants. They obviously pay no tax on the rental income, as doing so would be admitting that they were renting the property and not living in it themselves. 

I hope the revenue comes down hard on these people who are clearly abusing the system ... and pushing other legitamate buyers looking for homes out of the market. The revenue should have a swat team for Longford/Roscommon/Leitrim and Cavan!


----------



## JPF

Henny Penny I'm not sure if you are directing that post to my query but just to clarify in any case;

I do not want to evade tax. I wouldn't be able to sleep if i thought the Revenue could come knocking on my door in a few years time.

I want to know if I DO live there at weekends is it my PPR?


----------



## Henny Penny

I'm sorry JPF my post was not a dig at you ... just unscrupulous tax evaders ... at least you want to live in your house!


----------



## asdfg

> I want to know if I DO live there at weekends is it my PPR


 
Afaia your PPR is the place where you normally reside. If you rented a house during the week but moved to another house at the weekends then the house you stayed in during the week would be considered your PPR.


----------



## ubiquitous

asdfg said:
			
		

> Afaia your PPR is the place where you normally reside. If you rented a house during the week but moved to another house at the weekends then the house you stayed in during the week would be considered your PPR.



I wouldn't be so sure that this rule-of-thumb would necessarily apply in all cases. I would have thought that the facts of each particular case should be judged on its merits and a conclusion made on that basis.


----------



## Qawra

How many people on this thread are first time buyers? The reason that I ask is that it sounds like their is a little gripe/resentment in the replies. Eeveryone is critiscising the landlady here rather than the government. Nobody has really said that the governemtn is wrong with stamp duty conditions. If they want people to afford houses and not have to provide council housing etc then should they not be revamping the tax system to deal with high prices and is that not the real question here


----------



## vicar

What happens if you have two houses and live in them both!! 

A friend of mine has a house in cork which he stays in 1 week out of every two, he also has a house in Dublin which he stays in the other week, as he does business in Cork and dublin only it made sense for him to buya place down there, he didnt pay stamp on the second apartment in Cork as he maintains he is living in it and he actually doesnt rent it out when hes not there!! 
Is he breaking the law???


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## vicar

Also what happens if you buy a house that isnt ready for say six months and then sell it as soon as its ready and turn a quick few bob profit? Are you still liable to pay stamp duty ? I know a guy who did this also , (I know I seemto have a few dodgy mates!!!)


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## Howitzer

vicar said:
			
		

> What happens if you have two houses and live in them both!!
> 
> A friend of mine has a house in cork which he stays in 1 week out of every two, he also has a house in Dublin which he stays in the other week, as he does business in Cork and dublin only it made sense for him to buya place down there, he didnt pay stamp on the second apartment in Cork as he maintains he is living in it and he actually doesnt rent it out when hes not there!!
> Is he breaking the law???


 


			
				vicar said:
			
		

> Also what happens if you buy a house that isnt ready for say six months and then sell it as soon as its ready and turn a quick few bob profit? Are you still liable to pay stamp duty ? I know a guy who did this also , (I know I seemto have a few dodgy mates!!!)


 
From the slim details you've provided, there are loopholes, in both cases your "friends" should have paid stamp duty.

1. You can only have 1 PPR.

2. Assuming he actually buys the place, and not just the contract for sale, then stamp is liable.


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## ClubMan

Qawra said:
			
		

> Nobody has really said that the governemtn is wrong with stamp duty conditions.


 A separate thread for that discussion exists already:

Unfairness of stamp duty


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## asdfg

> Also what happens if you buy a house that isnt ready for say six months and then sell it as soon as its ready and turn a quick few bob profit?


 
If your friend does not move into the house and establish the property as his PPR then he will be liable to CGT on the increase in value of the property @ 20% less expenses.


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## Ann1977

*If the first-time buyer *rents* the house within five years Revenue will claim back or 'clawback' the difference between the higher stamp duty rates and the duty actually paid. The only exception to this is the 'Rent a Room' scheme where part of the house is rented out. If the house is *sold* within five years there is _no_ clawback."

A girl I know (ftb) bought a house last year with the intention of it being her PPR but for personal reasons she rented it out a couple of months after buying it.  She rented it to a social welfare tenant so obviously revenue will be aware sooner or later that she has rented the property.  However during a conversation last night she mentioned that she did not register with the PRTB, has not paid clawback or tax on the rental and is unaware of CGT implications.

After reading this thread I am a little confused about the clawback issue especially the line saying if the house is sold within 5 years there is no clawback - as in if she sells the house now does that mean she will not have to pay clawback even though the house was rented for the past year.  Let me mention she will not try to evade tax but she will sell the house if it means she will not have to pay the clawback.  

Other than that she is going to set up a meeting with the revenue asap - can anyone give me an idea of what revenue are likely to say to her?

Thanx,
Ann.


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## CCOVICH

She will have to pay stamp duty-the house was rented and THEN sold.


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## asdfg

> for personal reasons she rented it out a couple of months after buying it


 
She will also have to pay tax on the profit on rental income. See [broken link removed]


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## ClubMan

Interesting figures here on the penalties and interest that seem to apply to late payments of the _SD _clawback.


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## ligind

Can someone clarify whether an owner occupier must be resident for 2 or 5 years without having to pay stamp duty clawback, where stamp duty not paid orignially, if changing to investor (renting out property).
thanks in advance


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