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Tax Query

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  • 01-05-2006 9:01pm
    #1
    shiznit
    Closed Accounts Posts: 6 ✭


    Hi Folks,

    Just a quick query...
    I'm not a first time buyer as I bought an apartment 2 years ago with my brother (50/50). Both of us would now like to rent it out as hes going to the states for 2 years.

    I'm thinking of buying another property (new and under 125 sq meters) with my girlfriend who is a first time buyer the property we're looking at is 360,000.

    Will I have to pay stamp duty (what %?) and do I also have to pay clawback for TRS?

    Thanks in Advance,


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    #2
    Oral Slang
    Registered Users Posts: 1,519 ✭✭✭Oral Slang


    Taken from Oasis.gov.ie:

    Stamp duty on new houses and apartments
    Owner-occupiers of new houses/apartments are exempt from stamp duty, provided that the area of the house or apartment does not exceed 125 sq. metres (1,346 sq. feet) and a Floor Area Compliance Certificate has been issued. The house or apartment must not have been occupied prior to its purchase. It must be occupied as the owner's main place of residence for a period of five years from the date of the purchase deed. However if you sell the house during this period you do not have to repay stamp duty.

    A stamp duty 'clawback' arises where rent, other than under the 'Rent a Room scheme' is obtained within the five year period (or up to the date of a sale during this period) from the date of the purchase deed. The amount of the clawback is the difference between (a) the stamp duty payable at the higher rates which would have applied at the date of the purchase deed and (b) the lower duty (if any) paid as a result of obtaining the benefit of the reduced rates.

    Under the 'Rent a Room scheme', there is no stamp duty clawback where rent is received by the person in occupation of the house or apartment on or after 6th April, 2001 for letting of furnished accommodation in part of the house.

    If the area of the house or flat is greater than 125 sq. metres (1,346 sq. feet), some stamp duty is payable if the Chargeable Consideration is above the relevant exemption threshold. (The stamp duty is assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure. This figure is called the Chargeable Consideration.


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    #3
    Victor
    Registered Users Posts: 78,392 ✭✭✭✭Victor


    I suggest you live in this apartment and avail of the Rent-a-Room scheme (tax free up to about €7,000 per year). To many problems going the other way, with the prospect of expenses, stamp duty claw back, income tax, CGT, etc.

    Or what if you / your other half buys out your brother?

    I would strongly suggest professional advice on this one, either way.


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