Mortgage and tax discussion on Sunday Business show on Today FM

Hi

not sure if this is the correct forum. I briefly heard a discussion in yesterday mornings, Sunday Business show on Today FM. Someone was on talking about how people may have paid more in relation to Tax on Stamp duty for houses. I only caught the tail end of this discussion. I was wondering if anyone heard the show and whether they can explain what exactly was discussed. As this may affect the house that I have recently purchased.

any help would be appreciated.

Re: Mortgage and tax discussion on Today FM

The potential issue is that people who have bought new homes (where the price includes VAT) may have paid stamp duty on the VAT element of the price as well. That's the issue as far as I understand it.

So I don't think it's relevant to:

First-time buyers of new homes
Buyers of new homes where there was no stamp duty liability due to (a) cost, or (b) floor area.

I think that the advice is to contact your solicitor if you feel that there is an issue.

Re: Mortgage and tax discussion on Today FM

I looked into this recently as my solicitor said he didnt know exactly what Revenue's calculation was for Stamp and advised me to overpay the stamp and wait for a refund. As I would be paying the solicitor and then the solicitor would recieve any refund due, I felt this was a bit much...(my solicitor can be foregetful)


So.... I rang revenue and asked what their calulation was. I will provide that calculation here, but as always recommend that you ring them yourself. After all they are a nice bunch of people and always go out of there way to answer any questions I have ever had (seriously).

((BA / 113.5%) + site) x %owed = Stamp Duty Due

BA = Building Agreement Price (Usually House Price minus Site)
%owed = The percent of Stamp duty you owe (for example 3% for an investor for a house under 200K) this figure is available on revenues website

SO, for a new house, bought by an investor on a house valued at 170K...with a site cost of 10K, the BA would be 160K. Plug in the #s:

((160,000 / 1.135) + 10,000) x .03 = 4529.07

Re: Mortgage and tax discussion on Today FM

This calculation is in common use by Revenue, but it is wrong. It is predicated on the (incorrect) assumption that the "site" element of the total cost is either exclusive of, or is not subject to, V.A.T. In fact, a builder must charge you V.A.T. on the site price, and the universal practice is to simply quote a price inclusive of V.A.T. When acting for new house purchasers, I regularly have to get a letter from the builder's solicitor to confirm that the site price is inclusive of V.A.T. (even though the law forbids the builder from trying to sell it without charging V.A.T.) in order to satisfy Revenue on this one.

Re: Mortgage and tax discussion on Today FM

HMMM, maybe it's not so wrong as so many people are getting refunds now based on NOT using the calcualtion provided above. What does it matter if revenue is wrong, if THAT is the calulation they use?

Re: Mortgage and tax discussion on Today FM

Sorry - I never spotted this post at the time;

The reason it matters is that the Revenue calculation would give an incorrect stamp duty liability, and the purchaser would be overcharged. At a time when site prices are regularly over €100k, the saving can be significant.

Re: Mortgage and tax discussion on Today FM

The correct answer is in the wording of the legislation. Check the relevant sections of the Taxes Consolidation Act as amended by the Finance Acts - a few publishing companies e.g. Butterworths produce updated versions of the TCA incorporating the changes made in Finance acts.

I know it seems obvious, but what the legislation says is what is correct - anyone able to post relevant sections?

Re: Mortgage and tax discussion on Today FM

wow, do you get a reward for digging up old threads?
Bought two more houses since the original post and still using the original revenue provided calculation...

Re: Mortgage and tax discussion on Today FM

Well, I wasn't looking for a reward, but if you get a stamp duty refund based on submitting the corrected stamp duty calculations to Revenue, do by all means feel free to PM me for some sugggestions.

Or, dare I say it, a donation to Askaboutmoney?