CHAPTER 2

Conveyances on Sale

Section 29 Conveyance on sale combined with building agreement for dwellinghouse or apartment

Summary

The stamp duty position relating to the purchase of what is in effect a new house or apartment depends on the nature of the contracts entered into. The conveyance may be giving effect to a contract to purchase —

(a) a site with a connected building agreement,

(b) a partially completed house, or

(c) a completed house.

This section deals with (a). To assist readers the position regarding (b) and (c) is also set out below.

Purchase of site with a connected building agreement

This section charges stamp duty where a site is being sold and, in connection with that sale, a house or apartment has been, is being or is to be built, on that site. The stamp duty charge arises only where the sale of the site and the building of the house or apartment are part of an arrangement or are connected in some way. Stamp duty in such cases is chargeable on the aggregate of—

• the consideration paid for the site, and
• the consideration paid for the construction works.

At the time the conveyance giving effect to the purchase of the site is made the construction works may not have commenced or they may have commenced but have not been completed or they may have been completed. In any event because the conveyance is giving effect to a contract to purchase a site the conveyance must recite only the consideration provided for in the contract to purchase the site.

This section does not apply to the following:

• purchases of sites where it can be shown that no connection or arrangement exists between the sale of the site and the building of a house or apartment on that site e.g. where a person buys a site and employs a builder unconnected with the sale of the site, and
• transfers of sites on which the transferee will build a house by his or her own labour.

However, if the Revenue Commissioners are not satisfied about the genuineness of a particular transaction it is open to them to invoke the anti-avoidance provisions contained in subsection (3).

Purchase of a partially completed house

Where a person enters into a contract for the purchase of a partially completed house, and, where it is shown to the satisfaction of the Revenue Commissioners that there is no connection between the sale of the partially completed house and the employment of the builder chosen to complete the construction work, stamp duty will be based on the amount paid for the partially completed house. The conveyance giving effect to this contract must recite the consideration provided for in the contract.

Purchase of a completed new house

This section does not apply where the contract is a contract to purchase a new house which has already been completed. In these circumstances there can be no connection or arrangement between the sale of a site and a building agreement.

Details

Definitions

(1)(a) “building” and “land” are self-explanatory.

Charge to stamp duty

(2) Stamp duty is chargeable where land is being sold and, in connection with that sale, a house or apartment has been, is being or is to be built, on that land. The stamp duty charge arises only where the sale of the land and the building of the house or apartment are part of an arrangement or are connected in some way.

The question of the existence of a connection or arrangement, in so far as the transfer of the site and the building of a house or apartment on that land are concerned, will be determined by the facts of each case. In particular, the Revenue Commissioners will have regard to the following:

• whether building has commenced prior to the execution of any instrument of sale, and
• whether any relationship or association exists between the builder and the vendor of the land.

In determining the facts of a case, the Revenue Commissioners may require statements and/or statutory declarations from persons concerned with the sale of the land, or with building on that land, or from the persons acting on behalf of such persons. The Revenue Commissioners will also have regard to other information supplied to them or obtained by them in response to queries.

Where an arrangement or connection exists, stamp duty is chargeable on the aggregate of—

• the consideration paid for the land, and
• the consideration paid for the construction of the house or apartment on that land.

(3) Where building of a house or apartment has commenced prior to the execution of the instrument effecting the sale (i.e. the deed of conveyance), such house or apartment will be deemed to be within the category of houses or apartments which are built, being built or to be built for the purposes of subsection (2).

Calculation of liability where aggregate consideration not known

(4)(a) Where it is not possible to determine the aggregate consideration at the time the instrument is presented for stamping (e.g. where information regarding the cost of the building is not available) a multiple of 10 times the market value of the land is to be used as a basis for calculating the stamp duty liability.

(4)(b) (1)(b) If, subsequently, it is shown that the duty paid exceeded the amount which would have been initially payable had the combined value of the land and building been known and available at the date of stamping the Revenue Commissioners will refund the excess. Interest will be paid on repayments made on or after 1 November 2003 if the repayment is not made by the Revenue Commissioners within 93 days of receiving a valid claim for repayment as provided for in section 159B and then only at 0.011% for each day or part of a day from the expiration of the 93 day period. The application for refund must be made within 3 years after the date of stamping of the instrument and be accompanied by the original stamped instrument. Repayments of stamp duty may be made to the person who paid it or to any person who can satisfy the Revenue Commissioners that s/he is entitled to recover moneys from the person who actually paid the stamp duty.

Evidence required

(5) The Revenue Commissioners may require statutory declarations or statements regarding the facts of a case to be delivered to them. These may be sought from any persons involved in the sale of the land or the building work or from solicitors acting on such persons’ behalf.

Refunds

(7) Those who do not in fact proceed with building (despite having been charged stamp duty on the basis that a house or apartment was to be built in connection with the sale of the land) will not be unjustly penalised. If the building of the house or apartment has not been commenced within 2 years after the date of stamping of the instrument, the Revenue Commissioners will refund the duty “overpaid” as a result of this section.

Interest may be paid on the refund in accordance with the rules outlined in subsection (4)(b) above. The application for a refund must be made within 3 years after the date of stamping of the instrument and be accompanied by the original stamped instrument.

(1)(b) Repayments of stamp duty may be made to the person who paid it or to any person who can satisfy the Revenue Commissioners that s/he is entitled to recover moneys from the person who actually paid the stamp duty.

Relevant Date: Finance Act 2014