Finance Act 2022 inserted two new provisions, section 83DA and section 83DB, into the Stamp Duties Consolidation Act 1999 ("SDCA"). Each section provides for the repayment of stamp duty in the context of acquisitions of residential property where the property is subsequently used for certain types of social housing. The two new measures are due to come into effect from 1 June 2023.
By way of background, stamp duty at a rate of 1% applies to the transfer of residential property in Ireland on the first ?1 million, and a rate of 2% on the excess over ?1 million. Additionally, a higher rate of 10% applies to the acquisition of certain residential units where a purchaser acquires at least 10 units in any 12 month period (see our previous advisory here).
Section 83DA SDCA
Section 83DA SDCA provides for a full repayment of stamp duty paid on the acquisition of a residential unit where, within 12 months of the acquisition of the property, the purchaser enters into an agreement to sell the property to a housing authority for the purpose of an affordable dwelling purchase arrangement under the Affordable Housing Act 2021. In order to obtain a repayment of the stamp duty paid a claim must be made by the purchaser to the Irish Revenue which must be accompanied by a declaration that the relevant conditions have been met. A penalty and interest will apply if it subsequently transpires that the statements made in the declaration were untrue.
Section 83DB SDCA
Section 83DB SDCA will replace (once in effect) and extend a provision introduced by the Finance (Covid-19 and Miscellaneous Provisions) Act 2021 which allows for a partial refund of 10% stamp duty paid on the acquisition of a residential unit in circumstances where the purchaser executes a "qualifying lease" with a housing authority or approved housing body within two years of acquiring the residential unit (see our previous advisory here). Section 83DB extends the applicability of the repayment provision to circumstances where:
- the residential unit is designated as a "cost rental dwelling" (within the meaning of Part III of the Affordable Housing Act 2021) within six months of the acquisition of the residential property;
- the residential unit is registered as a "designated centre" (within the meaning of the Health Act 2007) within 18 months of the acquisition of the residential property; or
- the residential unit is registered as a "children's residential centre" (within the meaning of Part IV of the Child Care Act 1991) within 18 months of the acquisition of the property.
The refund due will be an amount equal to the stamp duty paid (at a rate of 10%) with respect to the acquisition of the relevant residential unit less the stamp duty that would have been payable (at a rate of 1%-2%) had the acquisition not been subject to of the higher 10% rate.
A clawback applies where: (i) the qualifying lease is terminated before the expiry of 10 years, (ii) the residential unit ceases to be registered as a designated centre before the expiry of 10 years, or (iii) the residential unit ceases to be registered as a children's residential centre before the expiry of 10 years. Where a clawback is triggered, some or all of the refunded stamp duty becomes repayable to Revenue. Any party claiming a refund under section 83DB SDCA will need to carefully consider the clawback provisions, in particular, they should ensure that appropriate protections are included in the relevant sale documents when structuring an onward sale of the property during the relevant 10-year period.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
