Revenue Note for Guidance

Section 30 Voluntary dispositions inter vivos chargeable as conveyances or transfers on sale

Summary

This section imposes a charge to stamp duty on a voluntary disposition inter vivos in any case where there is no consideration for the property conveyed or transferred or where the consideration is inadequate. Where there is no consideration or the consideration is inadequate stamp duty is chargeable on the market value of the property transferred. In all cases, therefore, where the conveyance or transfer is by way of a voluntary disposition inter vivos a valuation of the property must be submitted to the Revenue Commissioners (see Part 3).

Section 46(6) deems conveyances or transfers to which section 46(4) applies to be voluntary dispositions inter vivos.

Section 8(5) imposes an obligation to tell the Revenue Commissioners when an instrument operates as a voluntary disposition inter vivos.

Details

(1) A conveyance or transfer operating as a voluntary disposition inter vivos is chargeable with stamp duty as if it were a conveyance on sale and the market value of the property being conveyed or transferred determines the rate of duty payable.

(2) However, subsection (1) does not apply where the conveyance meets all of the following conditions:

the conveyance is to a body of persons incorporated under a special Act,
the special Act precludes the body so incorporated from dividing any profit among its members, and
the property is to be held for the purposes of (a) an open space or (b) its preservation for the benefit of the nation.

(4) Any conveyance or transfer which is not entered into in good faith and for valuable consideration is deemed to be a voluntary disposition inter vivos. Consideration is not regarded as valuable in the case of marriage or where, as a result of its inadequacy, a substantial benefit is conferred on the transferee. This means that a voluntary disposition inter vivos occurs where—

marriage is the consideration,
there is no consideration,
there is some consideration but in the opinion of the Revenue Commissioners the conveyance or transfer confers a substantial benefit on the transferee, either because the consideration is inadequate or for other reasons.

Example

A transfers to his son B his farm (value €100,000) in consideration of the son paying his sister €30,000 within 3 years. The chargeable consideration is €100,000. As the property is non-residential and because consanguinity relief (see Schedule 1) will apply the rate of duty is 1%.

Where the voluntary disposition inter vivos is subject to a mortgage the Revenue Commissioners will, as a matter of practice, deduct the mortgage liability in arriving at the value of the benefit passing. Stamp duty is chargeable on the net benefit taken i.e. on the equity of redemption.

Example

A gives B her farm worth €150,000. The farm is subject to a mortgage of €40,000. Stamp duty is chargeable on the equity of redemption i.e. €110,000. As the property is non-residential the rate of duty is 2%.

However, if the amount of the mortgage is greater than the value of the equity of redemption - say in the above example the mortgage was €80,000 and the equity of redemption was €70,000 - the Revenue Commissioners will apply section 41 and assess duty on the amount of the mortgage i.e. on €80,000.

(5) Various conveyances or transfers are excluded from the provisions of this section i.e.

conveyances or transfers made for a nominal consideration for the purpose of securing the repayment of an advance or a loan,
conveyances or transfers made for effectuating the appointment of a new trustee,
conveyances or transfers made for effectuating the retirement of a trustee,
conveyances or transfers where no beneficial interest passes,
conveyances or transfers by a trustee to a beneficiary,
a disentailing assurance vesting the fee simple in the person disentailing.

The conveyances or transfers listed in subsection (5) are not chargeable to stamp duty.

Relevant Date: Finance Act 2014