Will I have to repay Stamp Duty?

G

gkec

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Hi everyone,

I hope I'm in the right section here!

Myself and my husband want to travel for about six months next year. We have an apartment that we bought in April 2006 and availed of the first time buyers stamp duty exemption.

My question is this: if we rent our apartment for the six months we are off travelling and our income from that is below the rent a room threshold of e7620 then will we be spared the stamp duty clawback?

If this is not the case, what would be the best way for us to cover our mortgage while we are away?

Thanks in advance,

gkec
 
As far as I know (but would like to hear a definite answer from someone who has done it) you can rent out a room, but not the full apartment - if your own bedroom is rented out then its hard to see how it could qualify as your principal private residence.
 
hi webtax,

thanks for the reply. i called the stamp duty office in dublin castle and they basically said what you said. if you have a two bed property you can rent out one room in your absence. the key is that you always have the 'option' on the other room.

gkec
 
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You could always 'move' into the smaller room, lock it and rent the apartment as a 1-bed?
 
just be careful, I thought you had to be resident for the rent a room scheme, that's what I was told anyway.
 
micamaca said:
just be careful, I thought you had to be resident for the rent a room scheme, that's what I was told anyway.
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But if they are travelling for six months and retain their tax residency in Ireland during that time, they should be okay? (I'm not an accountant, though, so hopefully there will be confirmation from the experts!).
 
the legislation states that the clawback does not apply to "a person who, while in such occupation, derives rent or payment in the nature of rent in consideration for the provision, on or after 6 April 2001, of furnished residential accommodation in part of the dwellinghouse or apartment concerned".

my reading of that is that you have to derive the rent while in occupation of the property. you also have to derive the rent from part only of the house/apartment.

the question is whether you can be "in occupation" while you are travelling for 6 months. difficult to know how that might be interpreted. obviously "in occupation" cannot be read completely literally otherwise you could not even go on a 2-week holiday.
 
nmh001 said:
the question is whether you can be "in occupation" while you are travelling for 6 months. difficult to know how that might be interpreted. obviously "in occupation" cannot be read completely literally otherwise you could not even go on a 2-week holiday.
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gkec said:
hi webtax,

thanks for the reply. i called the stamp duty office in dublin castle and they basically said what you said. if you have a two bed property you can rent out one room in your absence. the key is that you always have the 'option' on the other room.

gkec
Click to expand...

The purpose of the legislation stating "in occupation" would be to prevent a person buying a property, renting the rooms out and living elsewhere while claiming rent a room relief on it.
It is not intended to target people travelling and keeping their own room as gkec's reply from the sd office confirms.
 
i agree with you generally webtax but the point i was making is that "in occupation" cannot be read literally. If i rent a spare room out and take a 2 week holiday during which time my tenant is the sole occupant of the house, then surely that doesn't breach the condition. So what if i extend my 2 week holiday to a month, or even 2 months? - i think i'd still be ok.

the question i was posing is at what stage does my absence cause me to cease being "in occupation"?

i think it could be argued if i take a 6-month holiday during which time my tenant still only rents a room, and if during that period i have the option of coming back at any time (eg, if something happened to cut short my holiday), then i'm still "in occupation" of my house. i think 6 months is about as far as it could extend, but it all depends on the facts and how you might be able to convince an appeal commissioner based on those facts.

but if, as you say, the reality was that a person is living somewhere else and renting all the rooms out, then the relief clearly doesnt apply.

and a general point i'd make is that the reply you get over the phone from the stamp duty office (or any other part of revenue) is not worth the paper its not written on. they frequently get things wrong and they will not be bound by the verbal reply you say you were given
 
I assume occupancy is linked to tax residency. There is a set number of days per year or over a rolling multi year period that you need to be there at midnight to qualify for residency.

Another thing to look at is the nature of your travel. Is this a pure holiday where you are travelling around for 6 months or are you going away on a "working holiday"? If you are working for you period away, it will obviousy have an impact as the country you are working in may regard you as (tax) resident there after a period of time.

As a general rule, you can only be reisdent in 1 place anywhere in the world at any one time for taxation purposes - generally the place you spent most time during a particular tax year - difficult to avoid as Ireland has tax treaties with most places worldwide you would expect to holiday/work in.

My gut feeling is that if you are e.g. going on the QE2 winter cruise for 6 months for soley recreational purposes, you will probably be ok.

However, if you are e.g. going to New York to work full time in an Irish bar and the 6 months may turn into 9 months or a year if you enjoy it, then you probably wont be ok.
 
Hi all,


Thanks for the replies. To clarify what I was told by the Stamp Duty office, it's imperative that the 6 months abroad is purely for a holiday and there is no work involved in any other state. It seems they are constantly being queried on this they do not have a hard and fast rule to refer to.

As someone above mentioned, anything the SD office tell you over the phone is conditonal to a massive disclaimer on their website.

That said, I was told that it would be grand just to rent one room and leave all our gear locked in the other.


gkec.
 
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