News & Articles

  • Taxation & Property – Recent Changes

    January 30, 2018

    The most significant property related tax change in recent year was introduced within Budget 2018. A significant hike in the rate of stamp duty on non-residential property (including agricultural land) was introduced increasing the rate from 2% to 6%. All conveyances of commercial/non-residential property executed on or after 11th October 2017 are liable to the increased rate. Although there was some ambiguity at the time the new measures were announced the Finance Act 2017 subsequently provided for transitional arrangements whereby a 2% rate of duty is chargeable on instruments executed before 1 January 2018 where there was a binding contract in place before 11 October 2017 and the relevant deed of conveyance/assignment contained the relevant certificate.
    In addition a late amendment to the Finance Bill 2017 during the Seanad Committee Stage introduced a new section 31C SDCA 1999 which imposed the higher 6% stamp duty rate on the sale or transfer of shares deriving their value from non-residential property, instead of the 1% rate normally applicable to share transfers. This new section impacts the ability to sell commercial property which is held within a company and also affect funds, loan notes and partnership interests. 

    In addition a review of the Local Property Tax (LPT) system by the Department of Finance will commence this year. At the moment LPT is a self-assessed tax where a homeowner calculates the amount of tax they owe based on an estimation of the value of their property based on 2013 valuations. LPT was frozen in 2015 until 2019 given the escalating property prices particularly in the Dublin market. 

    The major concern is that once the proposed revaluation takes place in 2019 there will be a major increase in LPT. On this basis there is pressure on the government to carry out a review of the tax and to introduce a revised methodology for the calculation of same. 

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