Stamp Duty Clawback

Bought a property 2 years ago. Rented it out last March, (due to financial reasons couldn't keep up the mortgage) - planning to move back next July. Did'nt pay stamp duty at original purchase time as was FTB.
Just found out about the implications of the implications for Stamp Duty - Do I now owe 5% of the total purchase price? Am I liable to pay interest on this? Is there any consideration given that I will be an owner occupier for 3 out of the 5 years?

Assuming that you paid no SD on it at the time then you are liable for whatever rate of SD an investor would have paid at the time of purchase on the original purchase price. If the liability is overdue you should file and pay it immediately. Revenue may be lenient in terms of interest and penalties if these would normally be due. Ideally you should get a tax advisor or accountant to help you out and to help mitigate any penalties. The fact that you would be resident for three out of the five years is irrelevant - the clawback is triggered once a property originally bought as an owner occupier PPR is subsequently rented out within the first five years. Basically to prevent people from buying ostensible as an owner occupier for the preferential SD rates but then converting the property to a rental property.

How do they know if the property has been rented out or not? Obviously there must be a link between the PRTB and the Revenue. But say for example he acquires the property back, how would they know it was rented out ? Just curious. It is not as if he has three or four properties, Padraig Flynn style and earning only €50k per year.

I have know people who have bought a second property and according to them, rented it for one year and then after the lease was up, sold it onwards without paying claw back, their must be a loop hole for fraudulence.

Not sure about how they would know but the onus is on the individual to declare the rental income and discharge any rental property tax liabilities that arise rather than engage in tax evasion and run the significant risk of storing up skeletons for the future - Padraig Flynn and the individual's annual earnings (not sure where the €50K figure comes from) notwithstanding. Your friends must have confused the exemption from CGT on the sale of a former PPR rented out for the last year of ownership as having some relevance to the stamp duty clawback. This is incorrect and the SD clawback applies in the situations that you describe above and your friends have an outstanding SD clawback liability based on what you've posted.

90210 said:

How do they know if the property has been rented out or not? Obviously there must be a link between the PRTB and the Revenue. But say for example he acquires the property back, how would they know it was rented out ? Just curious. It is not as if he has three or four properties, Padraig Flynn style and earning only €50k per year.

I have know people who have bought a second property and according to them, rented it for one year and then after the lease was up, sold it onwards without paying claw back, their must be a loop hole for fraudulence.

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Your friends should read this thread so.

90210 said:

But say for example he acquires the property back, how would they know it was rented out ? Just curious.

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His tenant claiming tax relief on the rent paid could give Revenue a little hint that the property is rented.

I would really like to hear from someone who has had to pay the clawback. I've heard a lot about this but it seems that revenue are relying on good citizens to point the naughty tax evaders out. The stamp duty office obviously doesn't talk to the tax-on-rental-income people. I know a lot of people who are in this situation and are not aware of their liabilities. Maybe its just a matter of time before technology improves?

Paula said:

The stamp duty office obviously doesn't talk to the tax-on-rental-income people. I know a lot of people who are in this situation and are not aware of their liabilities. Maybe its just a matter of time before technology improves?

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Yes - maybe they simply haven't gotten around to talking to them. In the meantime the interest and penalties on outstanding liabilities adds up. Hopefully such tax avaders will be caught out sooner if not later. It would be nice to see a real rip-off perpetrated by some individuals on the state and tax compliant individuals being nailed.

The stamp duty section earlier this year sent a number of letters to persons who purchased their homes as FTB to try and get a handle on how many of these were indeed FTB

I picked up a client who had done this at the advice of their solicitor (not in writing though)

They stated it had been a rented property for the period it was and recieved back a letter stating the amount of stamp duty due plus interest (no penalties)

These are just feelers that are being sent out but everyone knows someone who has either doen this or tried it

So, since post-DIRT, Revenue are now aware of the implications of chasing these taxes (cash collected) do not be surprised that there will be a large scale investigation in the next year or two

Look how much they have collectedfrom previous "llop-holes", scams,etc

[broken link removed]

Check out pg 1 of report,

"Special Investigations: €585 million collected from offshore campaign