Dáil Éireann Debate, Tuesday - 13 June 2023
383. Deputy Niall Collins asked the Minister for Finance if he will provide an update in relation to the residential development stamp duty refund scheme (details supplied); and if he will make a statement on the matter. [28006/23]
View answerStamp duty is a tax on certain instruments (written documents), and it is chargeable on instruments that transfer land and buildings situated in Ireland. Such instruments are usually called ‘Deeds of Transfer’ or ‘Deeds of Conveyance’.
Stamp duty is also chargeable on the following instruments:
• written leases of land and buildings situated in Ireland
• instruments that transfer shares or stocks of Irish companies (Stock Transfer forms)
• instruments that transfer property as a gift
• certain written agreements or contracts to transfer property
• certain written agreements to lease
• instruments that relate to Irish property or something done or to be done in Ireland, regardless of where they are executed.
A range of other stamp duties are also charged, though these do not impact on the acquisition of land or buildings.
The current rate of stamp duty on residential property is 1% on first €1 million of consideration and 2% on any excess. The current rate of stamp duty on the acquisition of on non-residential property is 7.5% on the full consideration.
A refund scheme is available where non-residential land is bought and the 7.5% rate of stamp duty paid, and within a stipulated timeframe, and also subject to a number of other conditions, is subsequently developed for residential purposes. This can result in the net stamp duty paid on such property being 2% following a refund.
To ensure the efficient use of sites for residential development, one of the conditions of the scheme is that a certain proportion of a site must be developed for housing in order to avail of a refund. There are two alternative tests to be satisfied in this respect. Either at least 75 per cent of the area of a site must be occupied by housing or the gross floor space of the housing units constructed must account for at least 75 per cent of the area of a site. The 75 per cent gross floor space test is aimed at apartment development.
It is accepted that many developers will wish to develop land in phases, such that each one is subject to its own commencement notice. A refund claim may be made in respect of each phase as it is developed. Construction must actually commence on a particular phase before a refund can be claimed in respect of that phase. A claim cannot be made in relation to a particular phase where 75 per cent of that phase will not be residential property when completed. However, where the ’75 per cent test’ will not be satisfied in relation to a phase or phases of a development but will be satisfied in respect of the entire development, there is the option of deferring the refund claim until construction commences on the final phase of the entire development.
This is a targeted relief designed to encourage high density development in centrally located areas. The 75% condition was included in the scheme in order to help ensure it achieved its primary goal of encouraging the construction of modern, high-density housing in inner and outer urban settings where “brownfield” sites might otherwise be deemed uneconomical to develop owing to the 7.5% stamp duty rate that would normally apply on such property.
The refund scheme was extended in Section 67 of Finance Act 2022 for a further 3 years, so that it is now available in respect of operations commenced by 31 December 2025.
