Dáil Éireann Debate, Tuesday - 26 July 2022
325. Deputy Michael Fitzmaurice asked the Minister for Finance if he will consider changing the stamp duty rate for those who purchase a commercial property and that undertake to turn it into a residential property; and if he will make a statement on the matter. [39754/22]
View answerSection 83D of the Stamp Duties Consolidation Act (SDCA) 1999 entitled “Repayment of stamp duty used for residential development” was introduced by section 61 of Finance Act 2017. It established a scheme whereby a portion of the Stamp Duty paid on the acquisition of non-residential land, where that land is subsequently developed for residential purposes, can be refunded. The net minimum stamp duty payable after a refund is 2%.
The purpose of this scheme is to promote the construction of high-density housing in inner and outer urban settings where “brownfield” sites might otherwise be deemed uneconomical to develop if subject to the full "non-residential" stamp duty rate of 7.5%. It also applies to one off rural housing, but a refund cannot be claimed for curtilage which exceeds 0.4047 hectares (1 acre).
A number of timing and other conditions apply to the scheme which seek to incentivise the delivery of housing promptly and (for multi-unit developments) at a sufficient density.
This scheme was previously extended by two years in Budget 2021, and is currently due to expire for construction projects commenced from 1 January 2023 or later.
Separately, the Deputy may be aware of the Living City Initiative (LCI), a scheme of property tax incentives provided for in sections 372AAA to 372AAD of the Taxes Consolidation Act 1997. It offers income or corporation tax relief for qualifying expenditure incurred in the refurbishment and conversion of qualifying buildings located within ‘Special Regeneration Areas' in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.
There are three types of relief available; owner-occupier residential relief, rented residential relief and commercial/retail relief. Owner-occupier relief is given by writing off qualifying expenditure incurred on the property against total income at a rate of 10% per annum over ten years. Rented residential and commercial/retail relief are both given by way of capital allowances, with eligible expenditure incurred on the property being written off over seven years at a rate of 15% per annum over 6 years and 10% in the final year.
Where a commercial property is converted for residential purposes, the property must have been built prior to 1915 in order to be eligible for either of the residential reliefs. Further information on the conditions applicable available from the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-10/10-13-01.pdf.
As the LCI is due to sunset on 31 December 2022, a review of the Initiative is currently being undertaken by my Department.
