Section 61 of the Finance Act 2017 (“Section 61”) introduced a Stamp Duty refund scheme where land is used for Residential Development.
The manner in which Section 61 was drafted raised a number of questions regarding the scheme’s implementation, prompting the Revenue to, last Thursday issue, Revenue ebrief no. 092/18 and a detailed updated section in the Revenue Operational manual for Stamp Duty (see section 14 – pages 19-32).
The refund scheme applies to land acquired after the 11th October 2017 and will entitle buyers to a refund of a maximum of 4% of the 6% Stamp Duty paid (i.e. a 2/3 refund), in certain circumstances.
The refund will only apply to the part of the property developed (buildings and curtilage) and there are time limits on commencing and completing development. The application for the refund can be made once the development commences.
The following are some headline points on the scheme but each case would have to be looked at on its own facts;
For a multi-unit development the completion date is the date a Certificate of Compliance on Completion is registered by a Local Authority.
The refund scheme will also apply to one off houses and in a typical 0.5 acre site (or smaller infill sites) it should enable the maximum 4% or 2/3 refund to be claimed. In such cases, if the buyer has opted out of the BCAR regime (where a Certificate of Compliance on Completion is registered by a Local Authority) then the test for completion is the issuing of an Electrical Completion Certificate that is provided following connection to the electricity network.
Revenue is presently updating their online platform to allow a refund application to be made online and this is expected to go live in July 2018.
The Refund Application will be made on the usual self-assessment basis and it is subject to clawback if conditions such as those relating to the “75% Tests” are not met.
The Revenue Operational Manual does contain worked examples to illustrate the operation of the scheme, which covers a number of different scenarios.
One area of doubt is whether an existing non-residential building (with might have limited or no vacant land around it) constitutes “Land” to allow it benefit from the scheme, where works were carried out to convert it to a Dwelling Unit.
It is noted that paragraph 1 of section 14.2.2 of the Revenue Operation Manual (which has just been updated) states that;
“Where existing non-residential buildings are being converted for residential use, Revenue is also prepared to treat internal adaptation work as construction operations”.
This would seem to suggest that the commencement of work to convert the use of an existing building from Commercial to Residential, would entitle a buyer in such a case to the benefit of the Refund Scheme.
We have raised a query with Revenue on this issue and await their reply.
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