So what is stamp duty and do you need to pay it? Stamp duty is a tax that is paid when a property has been transferred from one person to another.
When someone transfers their property onto you, you become the property owner and are charged a stamp duty tax.
Stamp duty is a tax charged on written documents that transfer ownership of land from one person to another. Stamp duty applies to all residential and non-residential properties.
The amount of stamp duty you pay depends on how much your property is worth; so the more valuable your property, the more stamp duty you’ll pay.
In this article. I am going to be breaking down what stamp duty applies to, how it is calculated, the exemptions to stamp duty, will stamp duty be charged on new buildings, the new higher rate introduced in Ireland in 2022, the charges associated with stamp duty, stamp duty in regards to gifts and inheritance and an overall summary of stamp duty.
- What does stamp duty apply to? Stamp Duty
- How do I calculate stamp duty? Stamp Duty
- What exemptions are there to stamp duty? Stamp Duty
- Is stamp duty charged on new builds? Stamp Duty
- What is the new higher stamp rate that has been introduced? Stamp Duty
- What costs are involved with stamp duty? Stamp Duty
- Do I have to pay stamp duty on a property I was gifted/inherited? Stamp Duty
- Summary – Stamp Duty
1.What does stamp duty Ireland apply to? Stamp Duty
Stamp duty will be applied every time you become a property owner. It applies to all properties, whether they be brand new or second hand. However new builds will not be subject to VAT, I go into this in more detail here.
Stamp duty applies to all residential properties such as houses, apartments or sites that will be used for buildings .
It also applies to non-residential property, such as land or housing sites without residential buildings.
2. How do I calculate stamp duty? Stamp Duty
In Ireland ,stamp duty is levied at 1% up to €1 million. Any property over €1 million is levied at 2%.
Here’s an example excluding VAT-
Lets say you have a property worth €2 million.
| First €1 million | 1% | €10,000 |
| Remaining €1 million | 2% | €20,000 |
| Total stamp duty | €30,000 |
For non-residential properties, stamp duty is charged at 6%.
So what is the difference between residential and non-residential properties?
To put it simply, a residential property is one suitable for dwelling, such as a home or an apartment. Stamp duty is charged at 1-2% for residential properties.
Don’t worry too much about calculating the stamp duty of your own property, as your solicitor will do this for you.
However, it’s still good to know roughly how much stamp duty you will have to pay before purchasing a property.
3.What exemptions are there to stamp duty Ireland? Stamp Duty
Of course there are a few exceptions where you don’t have to pay stamp duty.
There is no stamp duty charged on the transfer of property between-
- Spouses and civil partners.
- Former spouses (divorced).
- One cohabitant to their other cohabitant.
If you are buying a home under the local authority tenant purchase scheme you will only be charged €100 worth of stamp duty.
4.Is stamp duty Ireland charged on new builds? Stamp Duty
For new builds, stamp duty is still paid, however it is calculated differently. For new builds you will be charged stamp duty on the value of the home and VAT will not be included.
Here’s an example-
The standard rate of VAT is 23%. Let’s say we have a property worth €450,000. 23% of €450,000 is €103,500. This means that before VAT the value of the home was €346,500. Hence our 1% stamp duty tax will be charged on the €346,500, not the €450,000.
This only applies to new builds, not 2nd hand properties.
5.What is the higher stamp duty Ireland rate that has been introduced? Stamp Duty
In July 2021, an act was introduced that charges 10% stamp duty on property owners who have bought 10 or more properties within one year after the 20th of May 2021.
This act was introduced to stop the bulk buying of homes in Ireland and to discourage investment funds from buying up housing estates, so first time buyers are given a chance to purchase a home.
This higher rate does NOT apply to apartments. It also does not apply to homes bought for social housing purposes.
6.What are the costs involved with stamp duty Ireland? Stamp Duty
Your solicitor will calculate how much stamp duty is due for you before the sale is closed. This stamp duty is paid to the Revenue Commission and a stamp is placed on the deeds of the property.
Whilst having a solicitor to do all the hard paper work for you is a huge help, it does come at a price.
The price of a solicitor to guide you through this process will vary. Some solicitors will charge a flat fee, whilst some will ask for a % value of the property, such as 1 or 2%.
You should be prepared to spend between €1000-€3000 in legal fees along with VAT.
This is why it is important to research a good solicitor that will get the job done at a reasonable price before thinking about transferring properties. Check out more on solicitor fees here.
7. Do I have to pay stamp duty Ireland on a property I inherited or was gifted? Stamp Duty
According to the Revenue Commission [1] , if you are given a property as a gift that is situated in Ireland and the property has been transferred to you then yes, you will still have to pay stamp duty
However you will NOT have to pay stamp duty on a property that you have inherited, such as a property left to you in a will.
In a Nutshell – Stamp duty
So in summary, stamp duty is a major factor to take into consideration when you are planning on buying a property.
It is important to remember that between buying the property, solicitor fees as well as stamp duty, buying property requires a lot of money. Hence you should thoroughly research how much a property will cost you and put a lot of thought in before you start enquiring.
From this article, you should hopefully have a better understanding of how stamp duty is calculated and what factors you should keep in mind before looking about buying a new property.
What’s Next? Stamp Duty Ireland 2023
If you have any more questions about stamp duty or buying a new property feel free to book an appointment with our financial advisors here at moneysherpa free of charge here.
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