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Residential Development Stamp Duty Refund Scheme

Residential Development Stamp Duty Refund Scheme

The Finance Act 2017 provided for the Residential Development Stamp Duty Refund Scheme. Under this scheme, a person who has had land transferred to them legally on or after the 11th October 2017 and has paid the non-residential rate of 6% stamp duty may claim a refund of up to two-thirds of the Stamp Duty paid, where the property is being developed for residential purposes. The applicant may only make the claim after the building work has commenced.

The key points are as follows:

  • The development must commence within 30 months after the date the land was transferred to the applicant but no later than 31 December 2021.
  • The development must commence on foot of a Commencement Notice on the local Authority in your area
  • The development must be completed within 2 years of the acknowledgment of the Commencement Notice,

An applicant must complete the building work within 2 years after the date the local authority acknowledged the Commencement Notice. Where a development is carried out in phases, the 2-year completion period applies to each phase. When building work is completed, a Certificate of Compliance must be submitted to the local authority.

“One-off” houses

In the case of a one-off house, such a refund is not given for any area around the house which exceeds 0.4046 hectares (1 acre). In the case of a one-off house, you cannot claim a refund for curtilage which exceeds 0.4046 hectares (1 acre). The curtilage is the area around the house such as gardens, paths, driveways. Before you can commence building work, you must have planning permission. You must also submit a Commencement Notice to your local authority. Your local authority must acknowledge that Notice. Once your local authority has acknowledged your Commencement Notice, you can commence building work. An applicant does not have to satisfy the ‘75% required proportion’ test referred to below in relation to a one-off house.

The proportion of the land to be developed

There are two alternative tests to determine if the appropriate area of land has been developed to qualify for the refund. The tests ensure that a reasonable part of the land is actually developed for residential purposes. In relation to a multi-unit development or a phase in such a development, one of the "75% tests" must be satisfied as follows:

  1. At least 75% of that total surface area must be occupied by houses or apartments. 
  2. Alternatively, at least 75% must be accounted for by the gross floor area of the houses or apartments. The gross floor area is a measurement of the internal floor space of each floor of a house or apartment block. The measurement includes the internal walls and partitions. 

Because one phase of a development alone may not satisfy either "75% test", but the entire development must satisfy one of the "75% tests" to qualify, in such cases a refund can be claimed when building work on the last phase of the development is commenced.

Example

John bought a site of 0.2 hectares for €100,000 the deed is executed on the 12th February 2018 and his solicitor files a stamp duty return electronically with the Revenue and pays stamp duty at the rate of 6% being €6000. On the 17th of March 2018 John applies for planning permission to build a house on the site. Planning permission is granted on the 1st of June 2018. John then lodges the commencement notice with his local authority on the 12th of June 2018 and his local authority acknowledges receipt of the commencement notice on the 17th of June 2018. John does not have to satisfy the 75% test. The area to be occupied by the house together with the curtilage is 0.2 hectares. John can claim a refund of 2/3 of stamp duty that he paid as soon as building commences

The claim must be made electronically A refund cannot be claimed later than four years after the date on which the local authority acknowledges the Commencement Notice

If you require any further information please contact us at Eoin Murphy Solicitors.

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