Stamp Duty: Investment to PPR; PPR to investment?

Hi,

My PPR is an appartment puchased in 2004 for 295k. I now intend to buy an investment property of340 and will need to pay stamp duty of approx 15k ((340 - 13.5%(340) * 5%).

There is a possibility that within 12 months of buying this investment I rent my current PPR and move into the investment property.

My questions are would I have to pay stamp duty (i.e. claw back, because renting within 5 years) on my PPR and if so, would the fact that I paid stamp on the original investment make any difference to this payment?

If someone gives me the answer of "seek, professional, independant advice..." I would gladly take any recommendations for a Tax advisor who would be able to help.

However, I would be interested in answers from this board also.

Many thanks,
Mboy

Mammysboy said:

My questions are would I have to pay stamp duty (i.e. claw back, because renting within 5 years) on my PPR

Click to expand...

Yes.

Mammysboy said:

would the fact that I paid stamp on the original investment make any difference to this payment?

Click to expand...

No.

Thanks. Not the answer I wanted to hear but at least it's clear!

I'm trying to figure out the claw back stamp duty I would pay if I started to rent my PPR having lived there for three years.

Looking at http://www.citizensinformation.ie/categories/housing/buying-a-home/purchasing-a-home/stamp_duty/

and in particular this paragraph:
"A stamp duty 'clawback' arises where rent, other than under the 'Rent a Room scheme' is obtained within the five year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of obtaining the benefit of the reduced rates."

It's not clear to me what I would need to pay and as I don't understand (b), would someone be able to help?

The appartment cost 290k and based on (a):

290 less 13.5% VAT gives me ~256 @ 5% Stamp Duty rate which leaves me with a payment due of approx 12k, is this correct?

Many thanks again,
Mboy

Mammysboy said:

would the fact that I paid stamp on the original investment make any difference to this payment?

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The previous poster said that this makes no difference but I would beg to differ. You pay the difference between investor SD on the purchase and what you paid at the time. You don't pay the full investor SD in addition to what you already paid.*

* Unless, of course, you paid nothing!

Were you a first time buyer? how much stamp duty did you pay? Basically ClubMan is correct. A FTB pays a reduced rate of stamp duty so Revenue will seek to claw back the stamp duty at investors' rate, less any duty you paid previously.

Another question to add to the original post.

If you are a FTB, you pay no stamp duty, even if you sell within 5 years. However if you rent within that 5 years, except for rent-a-room scheme, you must pay the full Investors Stamp duty.

Is this correct? I also heard that you are allowed rent it for a year within the 5 year period and not have to pay SD, but can't seem to locate where I picked this up from. I think it was to help with people moving for work etc. Any basis to this?

Finally, I'm not sure why the OP is deducting VAT from the purchase price. Is this correct? Is yes then it would bring me down to a lower threshold.

I'm going to contact the revenue, but would appreciate any thoughts from you guys.

Thanks

I wasn't a first time buyer but it was a new appartment (< 125 sq metres) and therefore didn't pay any stamp duty; So I guees my calculation is correct?

Leroy42: yes I believe stamp duty is applied on the price exclusive of VAT (13.5%). Two different solicitors confirmed this for me this week (at least when purchasing to invest, not sure about converting your PPR to an investment). Also check out:

[broken link removed]

And in particular:
" New houses or apartments (whether under or over a floor area of 125 sq. m) which are purchased by investors are charged to duty on the entire price paid (exclusive of VAT) for the house or apartment."

I have another couple of questions

1. If you have an investment property for which stamp duty has been paid and later becomes your PPR and some time later is rented again, would you have to pay stamp duty twice? I doubt it but would be interested if someone could confirm.

2. If at a point in time you don't have a PPR (say you're renting or living with parents) but you do own an investment property and you then buy a new property (<125 sq m), would you pay stamp duty on this if your intention is to use it as a PPR?

Many thanks again for any responses to these questions.
Mboy.

You would not have to pay stamp duty twice, that would be double taxation. An owner occupier of a new build under 125 sq mt does not have to pay stamp duty.