Stamp duty slashed to 1% or 2%

IT took five years of annual pre-budget speculation, lobbying and hopes but, finally, Ireland’s stamp duty regime on house sales has been tackled, simplified — and slashed.

A new flat rate of just 1% on all house sales worth under €1 million comes into force from today with a 2% rate for €1m-plus properties.

It removes inequities among first and second-time buyers, and between new and second-hand properties.

Previous rates had been high — up to 9% at maximum.

“It brings Irish property transaction taxes in line with international norms,” said national agency Sherry FitzGerald. British rates average 2%. Irish commercial property transaction rates will remain at an average of 6%.

Finance Minster Brian Lenihan said he had three aims:

- To stimulate the property market.

- To provide necessary valuation information.

- To increase market transparency for a smooth market operation.

The move will provide some stimulus to a moribund property market, commentators said — and, perhaps in turn, trickle through into increased Government revenues in coming years.

Stamp duty income from residential property tax had slumped from 2006 market peak multi-billion euro sums (circa €3 billion overall from property, of which €1.3bn came from residential sales) to just €85m in 2009, and an estimated €100m in 2010.

The change, in force from today, means a buyer of a €375,000 property will save more than €17,000 on the tax, paying just €3,750. Buyers of €200,000 properties (a national average value outside of Dublin) will save €4,250, while buyers of a €600,000 property will save €27,000.

However, the change means first-time buyers (FTBs) of new properties will have to pay a 1% charge, as previous targeted reliefs to FTBs have been removed. It will be an extra inhibition for FTBs, coming on top of abolition of Mortgage Tax Relief, said mortgage brokers body PIBA.

Simon Ensor of the auctioneer body IAVI, described it as “a long-awaited reform”.