Section 53 Lease combined with building agreement for dwellinghouse or apartment

Summary

This section is similar to section 29 except that it refers to leases rather than to conveyances. Readers are advised to look at the summary to section 29.

This section charges stamp duty where land is being leased and, in connection with that lease, a house or apartment has been, is being or is to be built, on that land. The stamp duty charge arises only where the lease of the land 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 (other than rent¹) paid for the land, and
• the consideration paid for the construction works.

Where a person enters into a contract for the lease of land on which construction work has already commenced, and where there is no connection between the lease of the land and the employment of the builder chosen to complete the construction work, then stamp duty will be based on the amount paid for the land and the partially completed structure.

Details

Definitions

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

Charge to stamp duty

(2) Stamp duty is chargeable where land is being leased and, in connection with that lease, a house or apartment has been, is being or is to be built, on that land. The stamp duty charge arises only where the lease 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 lease of the land 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 lease, and
• whether any relationship or association exists between the builder and the lessor 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 lease 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 (other than rent) paid in respect of the lease of that 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 of lease, 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) 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 refund 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 lease.

(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.

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 lease of the land or the building work or from solicitors acting on their 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 lease of the land) will not be unjustly penalised. If the building of the house or apartment has not 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 lease.

(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