TA X E S / S TA M P D U T Y A N D C G T
How land and houses are taxed When you’re building a house you usually have to pay stamp duty on the value of the site and in some instances, capital gains tax. Here’s what you need to know. Words: Rob McOwan
it is best to take legal advice and then deal with any payment in a prompt and timely manner.
Stamp duty in ROI
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tamp duty is the government tax levied for changing the documents that specify who owns a particular property. Property is defined as land, a new build or second-hand property, derelict or not. Normally, the only factor affecting the amount of stamp duty is the value of the property. Capital gains tax is imputed on any profit you make from selling an asset, and this may be 80 / SELFBUILD / SUMMER 2019
something you may have to pay for your site depending on your circumstances and jurisdiction. Remember that whenever a tax liability arises, HMRC (NI) or the Revenue Commissioners (ROI) have zero tolerance when it comes to its prompt payment. In addition, legal representatives of a person or business have little or no discretion on the calculation of payment or when it is due to be paid. Therefore, whenever either stamp duty or capital gains liabilities arise,
For stamp duty purposes a residential property includes a derelict or uninhabitable house. A building such as a church, schoolhouse, shop or barn scheduled for restoration as a dwelling, may not qualify as a residential property for stamp duty purposes. Contact your local authority to find out if the property is considered commercial or residential. In the case of a house, stamp duty is calculated on the base price of the house before the VAT is added. If a site is bought in connection with (or as part of) an arrangement to build a house or apartment on it, then stamp duty will be charged at the residential property rate of 1 per cent on the total of the site cost and the building cost. Otherwise stamp duty will be charged on the site cost at the non-residential property rate of 6 per cent. If you’ve paid the 6 per cent rate you may qualify for the Residential Development Stamp Duty Refund Scheme for up to two-thirds of the amount of stamp duty you’ve paid. For a single dwelling unit to qualify for the refund the gardens, paths and driveways must not exceed 1 acre (0.4047 hectares). The written document transferring the land must be executed on or after 11 October 2017. In order to claim a refund, you must do the following: � File a stamp duty return � Pay stamp duty at the non-residential rate of 6 per cent on the transfer � Have received a stamp duty certificate � Commence building the house on the