Stamp Duty

Lord Spence

I am a first time buyer and my girlfreind is not , We are buying a second hand home and have to pay in the region of 8,500 euro stamp duty . I find this very unfair as I am a first time buyer and don't see why I should lose all my first time privalges because I am buying with somebody that has had a house already. It doesnt make sense, I should at the most only have to pay 50% stamp duty .

Is there any loopholes in terms of avoiding this stamp duty. It seems very unfair that just because my house is second hand that I have to fork out 8,500 euro on stamp duty. While rich folk buying there big 4 bed detached homes have to pay nothing. It sounds like a case of the rich get richer and the poor get poorer to me. But then again look who is running our country. Arnie for Taosoich !!!!!!!!!!!!

godtabh

Lord Spence wrote:

I am a first time buyer and my girlfreind is not , We are buying a second hand home and have to pay in the region of 8,500 euro stamp duty . I find this very unfair as I am a first time buyer and don't see why I should lose all my first time privalges because I am buying with somebody that has had a house already. It doesnt make sense, I should at the most only have to pay 50% stamp duty .

Is there any loopholes in terms of avoiding this stamp duty. It seems very unfair that just because my house is second hand that I have to fork out 8,500 euro on stamp duty. While rich folk buying there big 4 bed detached homes have to pay nothing. It sounds like a case of the rich get richer and the poor get poorer to me. But then again look who is running our country. Arnie for Taosoich !!!!!!!!!!!!

If you put your name on the deeds but make a legal binding document else where you dont have to pay stamp duty. Thats what I'm doing.

i.e

Buy the house in your name but go to a solisitor and make up an agreement which states that you have 50% and the girlfriend has 50% share in the house

Lord Spence

I was told by a solictor that would not work and that the banks will not give the mortgage because of that . Going to ask around try different people. Thanks.

godtabh

Lord Spence wrote:

I was told by a solictor that would not work and that the banks will not give the mortgage because of that . Going to ask around try different people. Thanks.

I've got a mortgage from a broker no problem.

Talk to the banks and tell them what you want to do.

I dont know why the solictor said that.

While each case is different I dont know why your solictor would tell you that do.

flanzer

kearnsr wrote:

Buy the house in your name but go to a solisitor and make up an agreement which states that you have 50% and the girlfriend has 50% share in the house

I'm doing that too at the moment....... look at changing your solicitor maybe. Some solictors can be a bit anal when it come to things like that!

Bluehair

flanzer wrote:

Some solictors can be a bit anal when it come to things like that!

Yes some solicitors can be a bit funny when it comes to facilitating people evading tax :rolleyes:

godtabh

Bluehair wrote:

Yes some solicitors can be a bit funny when it comes to facilitating people evading tax :rolleyes:

Your avodidng tax in a legal way. First time buyers dont have to pay stamp duty as long as their property is their own name and it doenst matter where the funding comes from.

Its hard enough to buy a property and even harder if you have to pay stamp duty when you dont have to.

Andrew Duffy

If your girlfriend has a beneficial interest in the property then she is a buyer, and the entity (you and her) buying the property is thus not a first time buyer. If your girlfriend makes no contribution whatsoever to the deposit or repayments and you can secure the load on your income alone, then you can legally avoid paying the duty. If you evade the stamp duty, you will be caught eventually, and the accrued fines and interest could bankrupt you. It is possible you could sue the solicitor who facilitated your evasion, but unlikely.

Incidentally, new property is subject to VAT at much higher rates than stamp duty, and is overpriced accordingly. The advantage is that you can borrow this money as part of your mortgage.

Gegerty

Look at it the other way around, his girlfriend should be paying stamp duty and if its put in his name and they get a legal document stating that she owns half then thats tax evasion.

There should be some way to accomodate him paying 50% stamp duty. We live in the 21st century but unfortunately our government and our laws are still in the 20th century.

kizzyr

Bluehair wrote:

Yes some solicitors can be a bit funny when it comes to facilitating people evading tax :rolleyes:

Tell me about it. I bought my house 5 years ago when you couldn't get a first time buyers grant for second hand houses and there was no way around stamp duty. As it turned out the people I bought my house from were under pressure to sell and so they dropped the asking price to just under the stamp duty threshold. My solicitor was really weird about this and kept telling my that she would process the paper work because I was evading tax:rolleyes: 5 years later after doing most of the ground work myself I eventually got the deed transferred to my name by the Revenue. About 2 or 3 years later my boyfriend moved in with me and now we are looking at moving house and because of me owning a house already we are looking at the higher rate of stamp duty. I met with a financial advisor this week and told them that if possible we wanted to buy the house in his name. She was horrified at this and said that no bank would do it and if by any chance I found one that would the Revenue would be onto it like a shot. I'm not so sure about this at all because as many of you have already said why should he be bearing the expense of my already owning a house. Slightly off topic now I think stamp duty is, of all the taxes we are forced to pay in Ireland, the worst. I cannot fathom the reason why if you educate yourself, get a job, pay host of other taxes and pay your way you are yet again peanalised for making something of your life. I can understand it for investors yes but if you are buying a home to live in I think it is outrageous to be taxed on it. Am I alone in this?

Ballyman

No you are not alone!!

I agree 100%, investors should be be taxed to the hilt and anyone buying a home to live in should not be penalised for wanting to do so.

Unfortunately it will never happen.

kizzyr

Ballyman wrote:

No you are not alone!!

I agree 100%, investors should be be taxed to the hilt and anyone buying a home to live in should not be penalised for wanting to do so.

Unfortunately it will never happen.

No, not with the shyster politicians we for some unfathomable reason seem to elect time after time. Even if the duty was altered in some way to be even a tiny bit fairer it might not be so offensive. If you had to pay it but only once then you've paid your way so that would be that. Or if it was capped in another way, I think they do this in UK This way as house prices spiral out of contol and realistic reach of people they don't have to add on the guts of € 50k plus to their house price.

godtabh

I'm only speaking of what happened to me.

I've a joint mortgage with some one who all ready bought a house.

The two of us will paying the mortgage equally.

The house will be in my name but there will be a legal agreement in place such that if we decide to sell any profit/loss is split 50/50.

I've checked the legalities of it all and as far as I'm concerned I'm covered.

Lord Spence

I've just talked to a solictor who I might be going to go with and she said that its is not 100% legitimet but that everybody is doing it. She said the only problem would be if the bank disagreed to it.

I can't see the problem to be honest , I'd have no problem paying 50% stamp duty because that would make sense.

godtabh

Lord Spence wrote:

I've just talked to a solictor who I might be going to go with and she said that its is not 100% legitimet but that everybody is doing it. She said the only problem would be if the bank disagreed to it.

I can't see the problem to be honest , I'd have no problem paying 50% stamp duty because that would make sense.

Are you sure about the % of stamp duty? DOnt have my figures handy but that seems way to high

jdivision

Lord Spence wrote:

I've just talked to a solictor who I might be going to go with and she said that its is not 100% legitimet but that everybody is doing it. She said the only problem would be if the bank disagreed to it.

It is tax evasion and you could end up paying for it. The Revenue Commissioners is looking into it at the moment. Even if parents help it's the same. From The Irish Examiner:

Stamp duty for first-time home buyers a ‘national scandal’

By Dan Buckley
THE decision by the Revenue Commissioners that first-time home buyers whose parents pay some of the price are liable for stamp duty will cause huge hardship, according to the Consumers Association of Ireland.Dermot Jewell, chief executive of the association, described as “a step backward” the announcement by Revenue that buyers whose parents provide part of the purchase price of a house would have to pay the duty.

However, Mr Jewell said major responsibility lay with mortgage lenders as it appeared they were lending to first-time buyers who clearly did not have the ability to repay the loan.

“It is an unfair disadvantage on people who require some assistance, but it also raises the issue of whether lenders are applying a proper standardised test on the ability of the borrower to repay the mortgage.”

Mortgage lenders increasingly require parental support for mortgage applications. While a straightforward gift of money or acting as guarantor of the loan will not lead to payment of stamp duty, becoming a party to the mortgage does.

In guidelines issued to solicitors, the Revenue stated: “To qualify for the relief, the entirety of the purchase monies, including any borrowings, must be provided by the first-time buyer.”

The loss of stamp duty relief will affect most severely those who are on low incomes or whose parents are not able to provide an outright cash gift to help them buy a home.

Figures from the industry indicate such co-lending arrangements account for 10% of lending to first-time buyers. On the basis of the €227,321 average price paid by a first-time buyer, according to the most recent Permanent TSB/ESRI house price survey, stamp duty could amount to more than €9,000.

kizzyr

kearnsr wrote:

Are you sure about the % of stamp duty? DOnt have my figures handy but that seems way to high

I think they mean 50% of the relevant stamp duty rate not 50% on the house price.

godtabh

kizzyr wrote:

I think they mean 50% of the relevant stamp duty rate not 50% on the house price.

That makes more sense.

Cantab.

Lord Spence wrote:

I am a first time buyer and my girlfreind is not , We are buying a second hand home and have to pay in the region of 8,500 euro stamp duty . I find this very unfair as I am a first time buyer and don't see why I should lose all my first time privalges because I am buying with somebody that has had a house already. It doesnt make sense, I should at the most only have to pay 50% stamp duty .

Is there any loopholes in terms of avoiding this stamp duty. It seems very unfair that just because my house is second hand that I have to fork out 8,500 euro on stamp duty. While rich folk buying there big 4 bed detached homes have to pay nothing. It sounds like a case of the rich get richer and the poor get poorer to me. But then again look who is running our country. Arnie for Taosoich !!!!!!!!!!!!

Could you not buy the house in your name and transfer the deeds at a later date?

Bluehair

Lord Spence wrote:

its is not 100% legitimate but that everybody is doing it.

Oh well then if everybody is doing it then it must be all right :rolleyes:

Look no-ones denying it's tough getting on the ladder but don't come back whinging in a few years when the tax man comes looking for his piece of the pie plus interest plus penalties.

It's not legal, simple as that. Don't kid yourselves.

Victor

kizzyr wrote:

Slightly off topic now I think stamp duty is, of all the taxes we are forced to pay in Ireland, the worst. I cannot fathom the reason why if you educate yourself, get a job, pay host of other taxes and pay your way you are yet again peanalised for making something of your life. I can understand it for investors yes but if you are buying a home to live in I think it is outrageous to be taxed on it. Am I alone in this?

But we all pay taxes (a) on income (b) on expenditure. Its the fairest, securest most equitable way to collect tax, as full evasion is very difficult.

I do however have a proble with it being a transaction tax as opposed to a gain (income, value added, profit, capital gain, whatever) tax.

The flipside is principal residences are exempt from capital gains tax, have a lower rate of VAT, mortgage interest relief, etc.

Swings, roundabouts.

kizzyr

Victor wrote:

But we all pay taxes (a) on income (b) on expenditure. Its the fairest, securest most equitable way to collect tax, as full evasion is very difficult.

I do however have a proble with it being a transaction tax as opposed to a gain (income, value added, profit, capital gain, whatever) tax.

The flipside is principal residences are exempt from capital gains tax, have a lower rate of VAT, mortgage interest relief, etc.

Swings, roundabouts.

Most taxes that we are asked to pay I'm fine with, in fact I'm one of the few people that doesn't think its bad to have to pay to have our rubbish collected, there are too many people who don't stop to think about the impact they are making on the environment and if this makes them pause for thought then its fine with me. However stamp duty is an unnecessary evil as far as I am concerned. If it must exist then it should be modified especially for those who are buying to live not to invest. Most of us are paying way way over the odds for a reasonable sized home and the stamp duty is all too often the deal breaker with regard to being able to afford your property or not. Again if we were charged stamp duty only once and then its seen that you've paid your way and made yet another contribution to the coffers of the state and your next home is free of stamp duty then I could live with it but to me at this stage the government are taking the proverbial and its another thing to add to my (already long) list of things to ask the campaigners about when they come knocking on my door.
As for a lower rate of VAT .................@ 21% don't make me laugh:rolleyes:

The_Conductor

Someone mentioned not paying CGT on the sale of a principle residence as a good thing- we had experience in the 1980s of what happened when CGT was to be paid- quite simply, no-one moved house. Revenue went into freefall. It got a few funny writeups in Iris Oifigiul- before sense was seen.

Yes, stamp duty is a bitch. What is being proposed in this thread equates to tax evasion, that is the illegal avoidance of paying taxes by willfully underdeclaring/misstating taxable cashflows to the Revenue Commissioners.

No-one has a god-given *right* to avail of FTB stamp duty. You either meet the criteria, which are laid down in stone, or you do not. I bought my first house (which was a second hand property) before the rules were relaxed on FTB and second hand homes. I missed out- tough luck.

It is entirely possible that the Revenue Commissioners may at some point in the future investigate people claiming these exemptions/status claims and if so, as pointed out earlier in this thread, it is entirely probable that demands, inclusive of interest and penalties, will likely be several magnitudes greater than the original amount would ever have been.

Sure stamp duty is unfair- but as is often said there are only two certainties in life, death and taxes. If these sums were not gathered by the Revenue Commissioners they would have to find these moneys elsewhere. Motorists are already taxed to the hilt, good luck trying to hike VAT or PRSI etc, as for corporate tax etc- IBEC are incredibly good political campaigners.

House prices will fall in their own good time- ECB interest rates are 2.5% now and the concensus is they will be another .5% by Feb 2007 and possibly another .75% by June 2008 (ECB = 3.75%). The Economist Magazine are still predicting a 40% fall in Irish property prices by June 2010- which seems extreme, but entirely possible.

Times they are a changin'

Victor

smccarrick wrote:

Someone mentioned not paying CGT on the sale of a principle residence as a good thing- we had experience in the 1980s of what happened when CGT was to be paid- quite simply, no-one moved house. Revenue went into freefall. It got a few funny writeups in Iris Oifigiul- before sense was seen.

Stamp duty, although payable by the buyer, has a much greater effect on mobility than CGT, because with Stamp Duty you pay the full tax no matter how often you move, with a CGT system you only pay the increment when you move.

The CGT PPR system is open to abuse through tax evasion - look at the houses on Ailebury & Shrewsbury Roads going for tens of millions of euro. Those houses do not have that intrinsic and something is going on.