Understanding Stamp Duty in Ireland may not be top of every house buyer’s list, but at some stage, you will need to know how Stamp Duty works and when you have to pay it.
Stamp duty is a tax you have to pay when buying a home, and when completing many legal documents. It is one of those taxes that are very hard to avoid and can add a significant cost to the purchase of a home.
There are different rates of Stamp Duty to pay depending on the value of the property you are buying.
LHK Mortgages can explain how Stamp Duty works and when you need to pay the tax.
What is Stamp Duty in Ireland?
Stamp Duty in Ireland is a tax paid when a property is transferred from one owner to another.
The new owner, the purchaser, is the one who pays Stamp Duty. The Stamp Duty cost is part of buying a property in Ireland, and you are legally obliged to pay it.
You will pay Stamp Duty on:
The rate of Stamp Duty increases as the value of a home or property increases. If you are buying a home in the €1 million or more bracket, you will be paying more in Stamp Duty.
Do I have to pay Stamp Duty?
Yes, you will have to pay Stamp Duty in Ireland. It is one of those taxes that you cannot avoid, like PAYE or VAT, and your solicitor usually takes care of paying your Stamp Duty during the purchase of the home.
Even when downsizing, you could need to pay Stamp Duty. So, you will be paying that tax you paid on your first home and maybe on that cottage you are retiring to when the time comes.
Stamp Duty is due on land zoned for building, and when you buy a site with planning permission to build a home.
LHK Mortgages in Dublin will outline when you need to pay Stamp Duty and how much it can add to the cost of buying a home.
What are the rates of Stamp Duty in Ireland?
The rates of Stamp Duty in Ireland vary from 1% of the house purchase price to higher rates when you go over the €1 million price tag for a home.
Stamp Duty is paid on the final purchase price as is listed on the documents you sign with your solicitor when buying the home.
In Ireland, Stamp Duty rates are:
If you are paying between €1.0 million and €1.5 million for the property, you will pay 1% on the first million and then 2% on the balance of the cost.
When you go over €1.5 million, you pay the 1% rate on the €1.0 million, 2% on the balance under the €500,000 and 6% on the amount over the €1.5 million mark.
If you are buying a Local Authority home, you will pay a flat rate of €100 when you complete the purchase.
Your LHK Mortgages mortgage adviser will explain how much Stamp Duty you may expect to pay.
Is VAT included in a Stamp Duty calculation?
No, VAT is not included in a Stamp Duty calculation in Ireland. VAT can add a lot to the price of a house, so thankfully, you do not include it when calculating Stamp Duty
VAT is added when buying a new house in Ireland. The current rate is 13.5%, which can increase the final amount paid. You only pay VAT on the base price, i.e., the figure agreed before VAT is added.
For example:
Base price of house – €500,000
VAT at 13.5% – €67,500
Total house price – €567,500
The house buyer only pays the Stamp Duty on the base price of the house.
Base price of house – €500,000
Stamp Duty at 1% – €5,000
The Stamp Duty is €5,000, which you must pay, as well as paying the €567,500 purchase price.
Stamp Duty, VAT and other fees can add to the cost of buying your home, so make sure you are aware of all the monies due at the time.
Are there any exemptions to paying Stamp Duty in Ireland?
There are exemptions to paying Stamp Duty in Ireland. The exemptions are designed to help families when transferring property to other family members or when property is transferred as part of a divorce or separation agreement.
The standard exemptions to Stamp Duty in Ireland:
The Revenue Commissioners operate a list of property transactions that are exempt from Stamp Duty.
A LHK Mortgages mortgage adviser can walk you through the Stamp Duty exemptions and determine if they apply to your circumstances.
At what stage of buying my home do I pay Stamp Duty?
You will pay the Stamp Duty to your solicitor at the end of the house buying process when tying up all the loose ends and paying all the bills.
Your solicitor will calculate the amount, and you will pay them the full amount, usually when you finish the paperwork with them.
The solicitor pays the Stamp Duty due to the Revenue Commissioners, which clears the registration of the property into your name.
If you do not pay the Stamp Duty, the Revenue will not clear the registration of your deeds.
