Stamp Duty

GreeBo · 12-10-2004 9:46am #1

Anyone have any thoughts on what (if anything) should be done about stamp duty in this budget?
Personally I think the categories are well out of date, and also they should be tiers.
i.e you pay the higher rate on the difference, not the whole amount.

The jump to 7.5% just because you go over €381k no longer makes sense, its not like this amount gets you more than a 3 bed in Knocklyon or Leopardstown.

Any thoughts?

Dingatron · 12-10-2004 9:56am

I think the rates need to be reviewed and threholds raised. They are not keeping in line with the increase in house prices. That or abolished but that will never happen. First time buyers hit with 3% once they hit €190,500 when the average house price is around the €250,000 mark is crazy. Glad I'm not a first time buyer now.

Victor · 12-10-2004 10:18am

I understand the concept of having a transaction tax like Stamp Duty up to maybe the 1% there is on shares. However, as a tax collection method on property transactions I would prefer it to be a gains tax like CGT or VAT, where the tax is on the increase in value, not the total amount.

MrPudding · 12-10-2004 10:23am

As someone trying to buy a house for the first time I am finding it a major issue. Given how hard it is to get on the ladder I think the gov should abolish stamp duty for first time buyers full stop.

MrP

GreeBo · 12-10-2004 10:51am

MrPudding wrote:

As someone trying to buy a house for the first time I am finding it a major issue. Given how hard it is to get on the ladder I think the gov should abolish stamp duty for first time buyers full stop.

MrP

Im in the same boat, and while I would love to see it happen, I dont think it will. Far too lucrative for them.

If it was just made a bit fairer, it seems the most blatant case of "the rich get richer, the poor get screwed"

Sleipnir · 12-10-2004 10:59am

It is ridiculous but the government are raking it in.
Remember that Stamp duty was introduced as a tax on 'Luxury' homes.
Today a 'luxury' home is a 3 bed terraced in Lucan apparently.

It amazes me that if you buy a house for €636,000 euro you pay 9% stamp.
If you buy a house for €10,000,000 you pay.........9% stamp.

It's crazy.

GreeBo · 12-10-2004 11:05am

Sleipnir wrote:

It is ridiculous but the government are raking it in.
Remember that Stamp duty was introduced as a tax on 'Luxury' homes.
Today a 'luxury' home is a 3 bed terraced in Lucan apparently.

It amazes me that if you buy a house for €636,000 euro you pay 9% stamp.
If you buy a house for €10,000,000 you pay.........9% stamp.

It's crazy.

or if you spend €380,000 you pay 4.5%, but heaven forbid the price gets bid up a grand or 2 coz then you are apparently buying a 5 bed detached house in Donnybrook and you get the 7.5% rate.
Thats a huge jump, Ive have had cases where the price goes up by a grand and its priced me out of the market.

If I had to pay the 7.5% on the bit that was over €381,000 that would be fine, but a jump of €11k is just not on.

Victor · 12-10-2004 11:38am

MrPudding wrote:

As someone trying to buy a house for the first time I am finding it a major issue. Given how hard it is to get on the ladder I think the gov should abolish stamp duty for first time buyers full stop.

You don't honestly think that reducing tax will actually reduce the price of houses do you?

Sleipnir wrote:

It amazes me that if you buy a house for €636,000 euro you pay 9% stamp. If you buy a house for €10,000,000 you pay.........9% stamp.

If you buy a house for €636,000 you pay 9% = €57,240.

If you buy a house for €10,000,000 you pay 9% = €900,000.

Zaph0d · 12-10-2004 11:38am

GreeBo wrote:

Anyone have any thoughts on what (if anything) should be done about stamp duty in this budget?

The tax is huge and out of line with UK rates. Stamp duty raised over €1 Billion for the government last year. Getting rid of it would increase demand for housing by allowing more people to consider purchasing who were previously priced out of the market. As supply has failed to meet demand for several years now, there is no reason to expect that this would change. The result would be higher house prices, but not a straight transfer of the stamp duty costs onto the house price.

Making it easier for people to buy houses by cutting taxes or giving them susbsidies when supply is being constrained always has the effect of rising prices. Many attempts to cool the Irish housing market have been laughably illogical. At one point in the last decade, the government were raising stamp duty to 'cool the market' and then changed their mind and decided that reducing rates would 'cool the market'. Fine Gael, in opposition, have promised that they will make housing more affordable by giving people money who want to buy houses. One problem for the government is that they don't want to reduce house prices, because this would upset home owners who secretly believe they are paper millionaires. If you look at the terms of the old Bacon reports, they guy was asked not to find a way to reduce house prices but to 'stabilise' them.

It appears that a lot of the demand for housing in the Irish market may be investment demand and this kind of demand can just evaporate when a loss of market confidence occurs (emperors new clothes style event - mammy mammy how can houses in crumlin cost €1 million? I dunno son, I...oh god maybe I'd better get off the roundabout now.)

The answer to house prices is more supply. Sadly that supply takes years to produce what with creating serviced sites, meeting planning rules, building infrastructure, finding enough workers etc.

GreeBo · 12-10-2004 11:56am

Victor wrote:

You don't honestly think that reducing tax will actually reduce the price of houses do you? If you buy a house for €636,000 you pay 9% = €57,240.

If you buy a house for €10,000,000 you pay 9% = €900,000.

But the problem (for most people) is the lower brackets no longer make sense, they no longer target luxury homes

€380,000 @ 3.5% = 13,300
€381,001 @ 7.5% = 28,575
that look fair to you?

Even if it does not reduce the price of houses, at least your house will be "worth" more when you sell it on. Stamp Duty is money for a worthless piece of paper.

Sleipnir · 12-10-2004 12:02pm

Well it's all relative to income.
Someone who can afford to buy a house for 10 million can well afford 900,000 in tax. They also get a gigantic house with huge tracts of land.
The smaller fella who's paying a semi-decent house in Harold's cross get's landed with an extra 60 grand.
That's just plain unfair.

The Corinthian · 12-10-2004 1:48pm

GreeBo wrote:

€380,000 @ 3.5% = 13,300
€381,001 @ 7.5% = 28,575
that look fair to you?

Offer to buy some of the seller’s 'furniture' separately for €3,000 and pay €379,000 for the property.

GreeBo · 12-10-2004 1:52pm

The Corinthian wrote:

Offer to buy some of the seller’s 'furniture' separately for €3,000 and pay €379,000 for the property.

Yeah but thats hardly the point.
Where do you draw the line?
Should you be able to pay €50k for a washing machine to save yourself stamp duty?
Whether or not you can get around it (in specific cases) it still remains an unfair punishing cost IMO.

leeroybrown · 12-10-2004 2:01pm

Also you have to consider that a lot of the houses that people buy for €380,000 are artificially constrained to that price or less by the stamp duty threshold. If the stamp duty threshold were raised to €400,000 I would expect a corresponding increase in price in that whole range of the housing market. In effect, while the theshold can be a problem for buyers it's probably the only reason that a three bed semi in Lucan is available for less than €380,000 at all.

Dingatron · 12-10-2004 2:10pm

That's a good point leeroybrown. When I sold my house I had to keep it just below the threshold even though it was worth a few grand more. Would of had a harder job selling it if I hadn't.

Sleipnir · 12-10-2004 2:12pm

Yeah I decided to sell just as the value on the house was approaching a higher level of stamp duty.
It can take a while to get over that little hump as buyers might decide to look at the house down the road which has a lower rate.
That'll always be the case though.

GreeBo · 12-10-2004 2:21pm

The Corinthian wrote:

Offer to buy some of the seller’s 'furniture' separately for €3,000 and pay €379,000 for the property.

Yeah but thats hardly the point.
Where do you draw the line?
Should you be able to pay €50k for a washing machine to save yourself stamp duty?
Whether or not you can get around it (in specific cases) it still remains an unfair punishing cost IMO.

Sleipnir · 12-10-2004 2:22pm

Also, a lot of solicitors won't do that.

The Corinthian · 12-10-2004 2:32pm

GreeBo wrote:

Yeah but thats hardly the point.
Where do you draw the line?

Draw what line exactly? Refuse to pay? Start a campaign or just moan about it? I simply suggested a way to circumvent it, which a bit more proactive than anything else that’s been suggested here.

Sleipnir wrote:

Also, a lot of solicitors won't do that.

Who said the solicitor had to do anything?

Does no one have any initiative any more?

Sleipnir · 12-10-2004 2:35pm

estate agent then.
And before you say you're talking about a private offer, I found that most people won't do that either for some stupid reason.

GreeBo · 12-10-2004 2:41pm

The Corinthian wrote:

Draw what line exactly? Refuse to pay? Start a campaign or just moan about it? I simply suggested a way to circumvent it, which a bit more proactive than anything else that’s been suggested here.

Draw the line of how much you can pay for cash to avoid paying stamp duty, I thought that was obvious from the title of the thread?
and you hardly think you are the first person to come up with that idea?:eek:

The Corinthian wrote:

Who said the solicitor had to do anything?
Does no one have any initiative any more?

Err the person drawing up the legal docs would kinda need to be involved if you are talking about handing over cash to the owner?
What do you suggest, a brown envelope of cash in the post?
And what if something goes wrong? Then what do you do?

Sleipinir wrote:

estate agent then.

The agent usually wont get involved with that sort of stuff, they simply want to sell the house, anyways that lowers their comission.

The Corinthian · 12-10-2004 2:43pm

Sleipnir wrote:

And before you say you're talking about a private offer, I found that most people won't do that either for some stupid reason.

Accept the offer or make it? If the former, then that’s life, you negotiate another way around it, look elsewhere or take the pain. At least you made an effort.

If it’s the latter case of buyers not making such offers, then that’s their business. Who am I to keep a fool and his money together?

GreeBo · 12-10-2004 2:47pm

The Corinthian wrote:

Accept the offer or make it? If the former, then that’s life, you negotiate another way around it, look elsewhere or take the pain. At least you made an effort.

If it’s the latter case of buyers not making such offers, then that’s their business. Who am I to keep a fool and his money together?

The whole point of this thread (I should know, I started it) is the problem with Stamp Duty and what we think should be changed in this Budget, not to talk about your super-cool way around it, or listen to you call people fools.

The Corinthian · 12-10-2004 3:21pm

GreeBo wrote:

Err the person drawing up the legal docs would kinda need to be involved if you are talking about handing over cash to the owner?
What do you suggest, a brown envelope of cash in the post?
And what if something goes wrong? Then what do you do?

Treat it like any other purchase.

The whole point of this thread (I should know, I started it) is the problem with Stamp Duty and what we think should be changed in this Budget, not to talk about your super-cool way around it, or listen to you call people fools.

Fair enough. You wanted to let off steam. Don’t let me get in the way.

MrPudding · 12-10-2004 3:22pm

Victor wrote:

You don't honestly think that reducing tax will actually reduce the price of houses do you?

No I don't think it will reduce the cost of the house. How would it do that? It will make it more afordable cos I won't have to come up with a load more cash on top of the deposit. I pay a sh1t load of rent so affording the mortgage is not the issue. The issue is the amount of money I need to habd over at the start. The deposit is bad enough without having to pay the gov their cut.

MrP

GreeBo · 12-10-2004 3:30pm

The Corinthian wrote:

Treat it like any other purchase.

If only I could!
I cant think of any other purchases where I get screwed so badly by trying to stretch myself and get good quality.
It really does setup the market for a load of people living out in Lucan, Leopardstown, etc being stuck with negative equity if(when) there is a crash.

GreeBo · 12-10-2004 3:34pm

MrPudding wrote:

No I don't think it will reduce the cost of the house. How would it do that? It will make it more afordable cos I won't have to come up with a load more cash on top of the deposit. I pay a sh1t load of rent so affording the mortgage is not the issue. The issue is the amount of money I need to habd over at the start. The deposit is bad enough without having to pay the gov their cut.

MrP

Same position for most people I would assume, I mean €400,000 is not much more than €1,250 pm repayment.
With a deposit of €40k thats pretty affordable for anyone (a couple) who has been saving.

Stamp Duty

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