Stampduty Loophole?

D

Dusty

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I was looking at a new property to buy to let, it is advertised with the auctioneer at €127,000. This would mean that there is no stampduty liable even as an investor.
However when I enquired I was told that the builder had increased the price to €130,000. I commented that this price would then attract stampduty, he replied that the builders accountant had told them that because the pre-VAT price of the property would be below the threshold, no stamp duty would apply.

Is this correct? It certainly sounds questionable to me.

Cheers
Dusty
 
I think he is right.

According to revenue.ie, for an investor in a new property, stamp duty is charged on the price excl. VAT.

See here: [broken link removed]
 
this is correct , the same thing happned to me and my lawyer sent in the check to revenue before i realised the situation regarding the VAT element of the purchase price . my lawyer then went to battle and the check was returned .

this is not a loophole , you dont have to pay stampduty
 
I realize that the amount of stamp duty is calculated on the pre-VAT price of the property. But is it the pre-VAT price that decides what stampduty rate is applied.

The fact that this property is being sold for €130,000 should put it in the 3% bracket for stampduty.

The builder is trying to say that it is €130K less the VAT and therefore under the €127K threshold and exempt from stampduty.

Doesn't ring true to me....
 
VAT value added tax
Value of the property+ VAT = your price
you pay the stampduty on the value of the property, i am 100% sure about this as i got back the money my lawyer had sent Revenue.
(investment property 134k value )
dont forget Revenue can and will give you two completely different opinions and ''correct'' answers to the same question .

Call them and get the information in writing if you still feel you have to

mikeyny
 
The builder is right, stamp duty is payable on the VAT-exclusive cost and the rate is determined by the VAT-exclusive cost.
 
Yes. You would not expect to see VAT charged on the sale of a second-hand house as it is usually a sale by a private individual not in the course or furtherance of business and should not therefore be a vatable supply.
 
This would mean that any new house/apartment up to a value of €144,144 is exempt from stamp duty for everyone including investors (assuming a VAT rate of 13.5%)

However if the house is secondhand the €127,000 limit applies.

Is this correct?

Cheers
Dusty
 
Yes. One other thing, if the price stated in the deed of conveyance is the VAT-inclusive price you need to let Revenue know this as Revenue's default position is that the price in the deed is the VAT exclusive price.
 
I would say the VAT exclusive price applies to investors only.

I would think that FTB's/Owner Occupiers pay stamp duty on the entire price paid (assuming it's not below market value).

See here [broken link removed]
 
No it equally applies for first time buyers- in other words you don't have to be VAT registered to take advantage of this.
 
Vanilla is right, the VAT registration status of the purchaser has nothing to do with the stamp duty. Pure and simple, stamp duty is charged on the VAT-exclusive amount, S48 of the Stamp Duties Consolidation Act.

The majority of investors would not be VAT registered anyhow, particularly with residential property, as short-term lettings of less than 10 years are VAT exempt, unless exemption is waived. If exemption is waived the investor can take an input credit for the VAT suffered on the purchase but must then charge VAT on the letting. Not many tenants would be willing to pay VAT on their rent.
 
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