Stamp duty in Ireland: how it works when you buy a home

Of everything a buyer pays for on closing day, stamp duty is the item that buys nothing at all. It is also the reason the Property Price Register exists, since the register is assembled from the stamp duty returns filed on residential sales. Understanding the tax therefore earns its keep twice over: it tells you what to set aside, and it explains why the published price data behaves as strangely as it sometimes does.

Who pays, and who files

The buyer pays stamp duty on a purchase of property in Ireland. In practice the buyer's solicitor files the return electronically with the Revenue Commissioners after the deed is executed and pays the duty out of the closing funds, which is why the money has to be sitting in the solicitor's account before closing day rather than arriving afterwards.

The filing deadline is short and measured in days rather than months from the date of the instrument, and interest and penalties follow a late return. That deadline is the first link in the chain that ends with a row appearing on the register, and it is why Irish sold prices are published so much faster than in jurisdictions where publication waits on the registration of title. The rest of that chain is traced in how long until a sale appears.

How the residential charge is built

Residential stamp duty in Ireland is charged on the consideration for the property, at a low headline percentage compared with several other European systems, with a higher rate applying to the portion of a price above a threshold at the upper end of the market. It is a percentage of the price rather than a fixed fee, so it scales with what you buy, and the calculation is straightforward once you know the current numbers.

Three other structures sit alongside the standard residential charge, and any one of them can change a budget completely. There is a separate and higher rate for non residential property, which is what a site without a house on it attracts. There is a much higher charge aimed at the bulk acquisition of houses, which applies when a buyer acquires multiple dwelling units within a period. And there are specific reliefs and refund schemes, including one that returns duty paid on land subsequently developed for housing. The stamp duty section of revenue.ie carries the current position on every one of them.

What is not there

Buyers arriving from the British system look for a first time buyer exemption from stamp duty and do not find one. Irish first time buyer support runs through a different mechanism entirely: the Help to Buy incentive, which is a refund of income tax and deposit interest retention tax paid in previous years, aimed at new build purchases and self builds and subject to its own limits and conditions. It is administered by Revenue, it changes with each finance act, and it is not a stamp duty relief. Check the current terms on revenue.ie rather than on any article, including this one.

Sites, self builds and second homes

Buying a site to build on is not the same transaction as buying a house, and the tax follows that difference. Bare land is not residential property, so the non residential rate applies to the site purchase, and the house you subsequently build is not itself a transfer and attracts no duty. Where a site is bought with a building agreement attached, the treatment depends on how the arrangement is structured, which is a question for your solicitor before you sign anything rather than after.

Buyers coming from the British system also look for a surcharge on a second home or a rental property and do not find an equivalent general charge here. What exists instead is the higher rate aimed at the bulk acquisition of houses, which is a policy response to institutional buying rather than a levy on a family buying a holiday cottage. This is exactly the kind of rule that finance acts revisit, so treat that description as a starting point and confirm the current position on revenue.ie.

Why new homes are taxed on the price before VAT

A new residential property in Ireland carries value added tax at 13.5 per cent, and that tax is part of what the buyer pays the developer. Stamp duty is charged on the consideration excluding that VAT, because taxing a tax would be an odd result. So the figure that goes on the stamp duty return for a new home is the pre VAT price.

That is the entire explanation for the most misread number in Irish property data. The register is built from those returns, so a new build row shows the pre VAT figure, while the brochure, the mortgage and the buyer's memory all involve the larger number. Multiply the register figure by 1.135 and you are back to what changed hands. The arithmetic and the traps around it are worked through in new build or second hand.

What stamp duty does to the register

Because the register price is the stamp duty consideration, several things follow that people expect to be otherwise. The tax itself is not included in the recorded price, and neither are solicitor fees, searches, a survey, a valuation or mortgage costs, so the amount a buyer actually spent was higher than the row suggests. Contents paid for under a separate and genuine agreement also sit outside the recorded figure.

That last point has a hard edge to it. Splitting a price between the property and the contents in order to reduce the duty is not a clever tactic, it is a false return, and the value attributed to contents has to be defensible as a genuine value for what is being sold. Your solicitor will tell you the same thing in fewer words.

Budgeting for it properly

1. Get the current rate and thresholds from revenue.ie before you bid, not after a bid is accepted.
2. Apply the rate to the price you intend to offer, and check whether the upper threshold catches any part of it.
3. For a new home, work out whether the price you are quoted includes VAT, because the duty is calculated on the figure without it.
4. Put the duty, the deposit, the solicitor fees, the survey, the valuation and the removals into one figure, and check that the purchase survives it at your highest bid rather than at your first one.
5. Have your solicitor confirm the final amount in writing before contracts are signed.
6. Set the bid itself from what comparable homes have closed at, using the register data for the area, rather than from the figure being quoted.

One further tax deserves a line, because it is regularly confused with stamp duty. Local Property Tax is an annual charge on the owner of a residential property, assessed by reference to valuation bands, and it has nothing to do with the once off duty on the transaction. It is a running cost rather than a purchase cost, and its bands are also set out on revenue.ie.

Sources: current rates, thresholds, reliefs and filing deadlines are published by the Revenue Commissioners. Transaction evidence comes from the Residential Property Price Register, published by the PSRA from those same returns. What is written here explains a mechanism and is not advice on your own tax position.