Stamp duty refers to the tax placed in certain written documents. It is the chargeable amount on instruments that handle buildings and land transfer. The instruments are commonly known as deeds of conveyance or transfer deeds.
What instances do you pay stamp duty?
Stamp duty is chargeable on the following:
Written leases of buildings and lands located in Ireland
Any instrument that transfers shares or stocks of an Irish company
When you have an instrument where the property is transferred as a gift
Contracts of property transfer
Instruments related to the property of things done or to be done in Ireland
Electronic transfers of stocks, shares, and marketable securities
ATM cards, credit cards, and debit cards
Levies such as insurance premiums, health insurance, pensions, and insurance compensation funds
Instruments are liable to stamp duty if they meet any or more of the above conditions if they are executed and sealed in Ireland or related to property in Ireland.
Paying Stamp Duty
The person receiving the property is usually the one tasked with paying Stamp Duty. If the property is transferred as a gift, all the parties to the drafted document are accountable. In case the accountable individual dies, then their representative takes up the responsibility. If several people are being held liable, then they can equally pay the stamp duty.
Stamp duty rates in Ireland and England changed from 1st July after the tax holiday in June 2020. What this means is real estate buyers will pay stamp duty for purchases above 250,000 pounds. Before these changes, buyers were not paying stamp duty on the initial 500,000 pounds of the purchase price. So from July, purchases from $250,000 to $925,000 will be charged 5 percent, purchases from $925,001 to $1,500,000 will be charged 10 percent, while assets above $1,500,000 have a stamp duty of 12 percent. 1st October 2021 onwards, the rates will return to normal, which means that the stamp duty reverts to $125,001 to $250,000 at 2 percent. To find out the exact rates, you are expected to pay, you can use the government SDLT calculator.
Stamp Duty Holiday Introduction
The stamp duty holiday was effected in July 2020, and it was meant to help buyers whose source of income was affected by Covid. This meant saving close to 15,000 for those purchasing homes. Second-home buyers and landlords were able to enjoy the tax cut. But they needed to pay a 3% stamp duty that they were charged under the past rules.
Stamp duty holiday stimulated the housing market, and the prices rose to 13.4%. Real estate agents reported a surge of interest as buyers and sellers completed property deals before the scheme ended. The holiday was later extended to June; however, that is not the only reason why the prices were surging. Closure of the stamp duty scheme may have no significant impact after all. Other essential factors that have caused an increase in prices include low supply, low-interest rates, the race for space, and accidental savings. From July, first-time homebuyers will be exempted from stamp duty on purchases of up to $300,000.
Please call Revenue for a free consultation.