Finance Bill - Property Measures

Oct 23, 2017

The Bill gives further detail to the provisions announced on Budget Day where the rate of stamp duty on non-residential property was increased to 6 percent and also provides details of transitional arrangements where binding contracts were entered into prior to 11 October 2017.   A stamp duty refund scheme in relation to land purchased for the development of housing is promised at Committee Stage.  In a move to protect the position where family farms are transferred, consanguinity relief is being extended for another three years at a fixed rate of 1 percent and the 67 years age restriction for the relief has been removed.  

Transitional rules for stamp duty

The rate of stamp duty on non-residential property, including agricultural land and non-residential lease premiums increased from 2 percent to 6 percent with effect from 11 October 2017.  The Bill did introduce transitional measures which state that stamp duty at a rate of 2 percent will apply to binding contracts that were entered into before 11 October 2017 once the instrument effecting the transfer is executed before 1 January 2018.  The instrument must contain a statement (in a form specified by Revenue) stating that a binding contract was entered into before 11 October 2017.  If an incorrect statement is furnished, this will be regarded as a Revenue offence under section 1078 TCA 1997.  

Stamp duty on transfers of certain agricultural property

While the transfer of agricultural land is now liable for stamp duty of 6 percent, the Bill amends the relief from stamp duty for certain transfers of agricultural property between relatives, known as consanguinity relief.  Before Finance Bill 2017, consanguinity relief reduced stamp duty on such transfers by half to 1 percent. The relief was due to expire on 31 December 2017 but the Bill has extended consanguinity relief for three years to 31 December 2020 and has fixed the rate of stamp duty that applies to qualifying transfers to 1 percent. This is despite the increase in the stamp duty rate on transfers of non-residential property to 6 percent.  In addition, the condition that the person disposing of the land must be under 67 years of age has been removed. 

The changes to consanguinity relief (other than the rate change) will come into effect on the enactment of the Finance Act. 

Stamp duty refund scheme

In order to address housing supply challenges, the Minster had announced on Budget Day his intention to introduce a stamp duty refund scheme where commercial land is purchased for the purposes of housing development. This was not included in the Finance Bill. The Department of Finance has said that the scheme will be introduced at the Committee Stage of the Bill. 

Residential leases

Currently residential leases for a term of less than 35 years are exempt from stamp duty where the rental income is less than €30,000 per annum.  The Bill extends this threshold to €40,000 and this change will take effect on the enactment of the Finance Act.

Miscellaneous technical stamp duty amendments

The Bill also makes some technical amendments to the stamp duty legislation including:

  1. clarifying that, where a surcharge applies as a result of the late filing of a stamp duty return, the surcharge is part of the stamp duty assessment;
  2. specifying that, in the case of a stamp duty relief which requires that qualifying conditions are met, the four-year time limit within which Revenue must make enquiries and assessments will commence on the latest date on which all of the conditions were required to be satisfied;
  3. provision for the recovery of certain tax-geared penalties outside of the standard six-year time limit.  This aligns stamp duty with the practice for other taxes and duties; and
  4. Revenue delegation powers when carrying out routine functions.