Self-builders unlikely to get full stamp duty refunds

Self-builders in ROI who bought land after October 11 2017 to build their own home will be eligible to claim their stamp duty refund as of January 1st, the Department of Finance told Selfbuild.

As of October 11 2017, site purchases have been imputed the 6 per cent rate of stamp duty; before the changes in the budget, the rate was 2 per cent. However the Finance Bill as approved by both houses of the Oireachtas sets out how the refund will be calculated, and this is likely to leave self-builders short of getting anywhere near a 4 per cent refund.

The refund only applies to the ‘proportion of the land occupied by the dwelling unit’

The refund can be claimed by self-builders and developers alike, but according to the legislation the refund scheme only allows you to claim back on the area you build your house on, which is calculated as follows: A x B x ⅔ where A is the amount of stamp duty paid, at the rate of 6 per cent, on the instrument, and B is the proportion of the area of the land represented by the appropriate part, expressed as a fraction. For self-builders (single dwelling unit) the refund does not apply to portions of the land you’re not building on. In other words B is the proportion of the land occupied by the dwelling unit. For example if you paid €100,000 for 2,000 sqm of land (the equivalent of roughly half an acre), the stamp duty charged at 6 per cent is €6,000. Under the previous rules you would have paid 2 per cent, or €2,000. The refund scheme only allows you to claim back on the area you build your house on, so if the footprint of the house is 150sqm, Selfbuild calculates you would be eligible for a refund of €6,000 x (150/2,000) x 2/3 = €300. The main conditions to be eligible for the refund are to have paid the 6 per cent stamp duty when acquiring the land, construction work must have commenced within 30 months of the land being purchased and the home must be completed within two years of the commencement of construction.

The case of self-builders who ‘opt in’

Self-builders who have opted in of the Building Control statutory inspections process seem to not be eligible for this refund. The section in the Bill that exempts self-builders from having to build on 75 per cent of the land to be eligible for a refund states that this is only the case where the land is acquired for the purpose of constructing a single dwelling unit, and a declaration of intention to opt out of statutory certification. However other parts of the bill refer to building ‘single dwelling units’ which would seem to include both those who opt in and opt out. Revenue has been contacted for comment and we will be posting further updates as we get them.

Timings

The Finance Bill 2017 is set to be enacted today or Friday 21st December at the latest, the ROI Finance press office told Selfbuild. The Bill has gone through the Oireachtas and is awaiting the signature of the President. According to Revenue, last year’s budget was signed by the President and enacted on December 25th 2016. The approved Finance Bill 2017 was passed by both houses of the Oireachtas on December 13th.