Stamp Duty Clawback Under 2 Years

Hi there,

Without getting into too much detail, my partner and I are currently going through a very difficult period in our relationship (unfortunately, most likely with the end in sight). We bought a house together 15 months ago for €440k as 2 first time buyers. The house is 1036sqft (96sq metres) and was therefore exempt from stamp duty. We are both reasonably intelligent people and realise that it is not an option (for various reasons) to sell the house at the moment. I understand that with this years budget, the clawback period was reduced from 5 years to 2 years in relation to renting the house out. I'm a little confused in relation to this. I realise, due to the fact that we have the house less than 2 years, we would fall into the category for a clawback, but as the house is under 125 sq meters, would we be exempt from any clawback? Also, is this the only implication of us renting the house out entirely? Or is it simply "illegal" to rent any new house out before 2 years?

Any help, that could make a particularly difficult situation a little easier would be greatly appreciated!

The 2 years apparently kicks off only when your solicitor has registered your deeds.

Check when this was done, 24 months from then you can rent the place. I got a letter from revenue confirming our dates were ok and am now currently renting our 1st home.

We were about to cut a cheqe for the stamp when the change came into being !

UnclePaulie said:

I realise, due to the fact that we have the house less than 2 years, we would fall into the category for a clawback, but as the house is under 125 sq meters, would we be exempt from any clawback? Also, is this the only implication of us renting the house out entirely? Or is it simply "illegal" to rent any new house out before 2 years?

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If you rent the house out in under two years, you'll pay the "Investor Rate" of Stamp Duty that applied 15 months ago. That was 7.5% of €440,000 or €33,000.

Suggest you hang on until your two years has expired.

Thanks for the replies guys.... Is the 7.5% not applicable to the balance of 440k minus 125k? i.e. 315k which would equal €23k. Its still a lot of money, and to be honest we'll probably just sit tight for the moment anyway. At least we can rent out one or two rooms if one of us is living there for the moment.

UnclePaulie said:

Is the 7.5% not applicable to the balance of 440k minus 125k? i.e. 315k which would equal €23k.

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No the €125,000 theshold system only came in with the last Budget and wasn't in place when you bought.

and can someone tell me after the 2 years are up and you decide to rent your property out, what are the tax liabilities?

i really dont know this. can someone explain this please?

You pay income tax on the rent, less certain allowable expenses e.g. mortgage interest, agency fees, insurances, repairs etc.

You'll pay Capital Gains Tax on the sale price if you sell for a profit, again with some allowances.

The tax implications of renting out a property (in particular a former PPR) are covered in many existing threads and in the Property Investment forum FAQs and key topics.

if you rent out you will need to tell the insurance company with whom you have fire etc cover