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Stamp duty rates for site with planning but no intention of building

  • 06-12-2014 03:03PM
    #1
    northbound
    Registered Users, Registered Users 2 Posts: 3 ✭


    Hi I am having difficulty finding info about the correct rate of stamp duty I might pay for a site that has FPP for several apartments...this purchase would be just an investment and I do not intend building on this land.


    The revenue.ie site provides the following as a guide:

    Purchase of a site

    Where an individual purchases a site with no connected agreement to build a house or apartment, the transfer of the site is chargeable at the appropriate rate for non-residential property.


    Example 5
    Site
    Consideration: €50,000
    Stamp duty payable: €1,000
    [€50,000 @ 2%]

    Where an individual purchases a site in connection with, or as part of, an arrangement to build a house or apartment on that site then stamp duty will be charged on the aggregate amount of the site cost and the building cost at the appropriate residential property rate.

    Example 6
    Site with connected building agreement for a house or apartment
    Site cost €50,000
    Building cost €165,000
    Aggregate cost: €215,000
    Stamp duty payable: €2150
    [€215,000 @ 1%]

    The bottom line here is does FPP mean that it is "an arrangement to build"? Obviously there is a massive difference between the outlay between example 5 and 6 above if several units are involved.

    mortgages.ie describe the larger liability as "Where your agreement to buy a site is linked to a construction contract, stamp duty may be payable on the full amount of the site plus the construction contract."

    Therefore does the stamp duty depend on planning or a construction contract?

    Apologies for the longwinded layout and thanks to anyone who is well informed that can provide clarity on this.


Comments

  • #2
    Mrs OBumble
    Registered Users, Registered Users 2 Posts: 27,015 ✭✭✭✭Mrs OBumble


    northbound wrote: »
    ...thanks to anyone who is well informed that can provide clarity on this.

    The only kind of clarity I would accept on an issue like that would be on letterhead from either the Revenue Commissioners, or an accountant who stands behind their advice.

    Randomz on the interweb could tell you anything at all.


  • #3
    northbound
    Registered Users, Registered Users 2 Posts: 3 ✭northbound


    True....I suppose what I should have stated is that I was hoping that someone out there has been down this road already and been given a definitive answer.

    I also fully agree that this is a question that needs to be answered by the revenue but seeing as how it is biting me, I felt there was nothing to lose by putting it into this domain as I cannot contact the Stamp Duty Office til Monday morning.

    Obviously I will make that call but if anyone has relevant post 2012 experience I would welcome the input, thks


  • #4
    Victor
    Registered Users, Registered Users 2 Posts: 78,904 ✭✭✭✭Victor


    Planning permission is not an arrangement to build. If you make any changes to the property, note that VAT may apply, even if you are not VAT registered.

    To be slightly judgemental, you are speculating, not investing. :)


  • #5
    northbound
    Registered Users, Registered Users 2 Posts: 3 ✭northbound


    Victor wrote: »
    Planning permission is not an arrangement to build. If you make any changes to the property, note that VAT may apply, even if you are not VAT registered.

    To be slightly judgemental, you are speculating, not investing. :)

    Thanks....my gut was that pp is not an arrangement to build but need the facts before proceeding so will make some calls in the morning.

    Yes I did anticipate that I might get shot at for 'speculation' but I would not be borrowing so if it didn't pan out then it would be just me taking it on the chin!


  • #6
    D3PO
    Registered Users, Registered Users 2 Posts: 7,879 ✭✭✭D3PO


    to get FPP you have to submit building plans. If building plans have been submitted then there is "an arrangement to build" weather you build or intend to or not is irrelevant.


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  • #7
    murphaph
    Registered Users, Registered Users 2 Posts: 19,259 ✭✭✭✭murphaph


    An "arrangement" in this case almost certainly means a contract with a builder. It's no different here in Germany: land bought, even with planning permission, is only taxable at its cost price for "stamp duty" purposes, but if you buy the land from a developer and are bound to him for your house build, then the "stamp duty" is calculated based on the total price of the land + finished house.

    In Ireland is is unusual to buy a site and be tied to a a particular developer but imagine if the law didn't take account of it...every single house bought in a housing estate would be sold in 2 parts...you'd buy the land and pay stamp duty on that and then buy the services of the builder to build the house, paying no stamp duty as such a contract doesn't have to be stamped. It's basically to prevent this happening that the law is phrased the way it is.

    I think Revenue will actually be able to clarify this in writing quite easily.


  • #8
    Marcusm
    Registered Users, Registered Users 2 Posts: 11,126 ✭✭✭✭Marcusm


    northbound wrote: »
    Hi I am having difficulty finding info about the correct rate of stamp duty I might pay for a site that has FPP for several apartments...this purchase would be just an investment and I do not intend building on this land.


    The revenue.ie site provides the following as a guide:

    Purchase of a site

    Where an individual purchases a site with no connected agreement to build a house or apartment, the transfer of the site is chargeable at the appropriate rate for non-residential property.


    Example 5
    Site
    Consideration: €50,000
    Stamp duty payable: €1,000
    [€50,000 @ 2%]

    Where an individual purchases a site in connection with, or as part of, an arrangement to build a house or apartment on that site then stamp duty will be charged on the aggregate amount of the site cost and the building cost at the appropriate residential property rate.

    Example 6
    Site with connected building agreement for a house or apartment
    Site cost €50,000
    Building cost €165,000
    Aggregate cost: €215,000
    Stamp duty payable: €2150
    [€215,000 @ 1%]

    The bottom line here is does FPP mean that it is "an arrangement to build"? Obviously there is a massive difference between the outlay between example 5 and 6 above if several units are involved.

    mortgages.ie describe the larger liability as "Where your agreement to buy a site is linked to a construction contract, stamp duty may be payable on the full amount of the site plus the construction contract."

    Therefore does the stamp duty depend on planning or a construction contract?

    Apologies for the longwinded layout and thanks to anyone who is well informed that can provide clarity on this.

    Traditionally in Ireland, new build properties were acquired in a slightly complicated way - there would be a contract for a purchase of land or some relevant interest in the land and a contract for the construction of the apartment or house. This split contract arrangement could generally clarify tax matters - only pay stamp duty on the land and not the cost of putting up the building and simplifies the VAT situation on the building contract.

    Resi property attracts a low stamp duty rate - if there's no residence and no contract to construct a residence, it won't easily fall into the residential category!


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