Along with a number of associated costs that come with buying a home, stamp duty needs to be considered. It can be a significant sum in many cases and it’s important that the owner is aware of those costs and takes them into account. So, what is stamp duty in Ireland? And what costs will you likely need to pay?

 

What is stamp duty?

Stamp duty is a tax that is levied on the purchase of property or associated documents. In this guide, we will specifically be referring to the payment of stamp duty in Ireland relating to property. Under current property law, this is a compulsory tax, although there is the potential for relief in some isolated cases.

 

How stamp duty is calculated for properties in Ireland

Levels of stamp duty may be subject to change, but these figures are correct, as of 2023.  The current rates on a purchase of a residential property are:

 

• 1% up to the first one million Euros
• 2% on any excess beyond that one million Euro threshold

 

For non-residential properties, the level of stamp duty is 7% across the board. Those figures have been in place since an update in property law in 2010, so how do they affect a house purchase in real-money terms?

 

Examples of stamp duty calculations

We can use a number of calculations to explain just how much the cost of the stamp duty in Ireland will apply to you. Let’s say, hypothetically, you have agreed to purchase a property at 500,000 Euros. This leaves us with the simple calculation:

 

• 500,000 x 1% = 5,000

 

This means that the cost of stamp duty on your property purchase is 5,000 Euros. That straightforward calculation can continue to apply to any property valued up to 1 million Euros. Beyond that, we need to add in the second rate of stamp duty.

 

In the next example, the property in question is to be purchased at 1.5 million Euros. Under current property law in Ireland, the first million will be taxed at 1%, while anything above that figure will attract the 2% rate.

 

Our calculation now works as follows:

 

• 1,000,000 x 1% = 10,000
• 500,000 x 2% = 10,000
• 10,000 + 10,000 = 20,000

 

This means that the cost of stamp duty in Ireland on a property valued at 1.5 million Euros will be 20,000 Euros. While these are specific calculations, they can easily be applied to any property purchase in Ireland. Just remember the two levels:

 

• Up to 1 million Euros – 1%
• Balance over 1 million Euros – 2%

 

Exemptions and reliefs

There are some cases where stamp duty may not be payable under Irish property law. They are in the minority and they generally relate to the nature of a sale. An example includes the transfer of property between spouses or civil partners. In the event of a divorce, it may be the case that there is a transfer of ownership under the property. While a transaction has technically taken place, stamp duty is not payable in cases such as these.

 

Other common cases of exemptions are mainly attached to commercial property. For example, the reorganisation of a company may lead to a change of title under the property deed, and this is another instance where stamp duty will not apply.

 

Exemptions tend to take place in cases where there has been a transfer of ownership rather than a sale. In the vast majority of property purchases, stamp duty will apply in Ireland, but this is another area which can be explained in full by your solicitor.

 

Payment of stamp duty

Stamp Duty is payable to the Irish government and it will typically be collected by a solicitor at the time of property purchase. It is a completely separate charge and does not form part of any mortgage that has been taken out to secure the home.

 

Your legal representative will issue a bill for stamp duty, based on the current rates, at a time when contracts are exchanged. It is possible for an individual property purchaser to pay their stamp duty online. The government has its own online revenue collection system which will cover a whole range of domestic and commercial taxes.

 

While the online revenue system isn’t complicated to use, when a solicitor is already acting for you in terms of exchanging contracts and other legal details of the purchase, it’s simply more convenient for that solicitor to handle the stamp duty element, too.

 

Conclusion

Stamp duty in Ireland is all part of a property purchase contract and it can only be avoided in exceptional circumstances. In the vast majority of transactions, it must be paid as part of the overall contract.

 

After many years of variable charges, the current levels are simplified, but this can still be a complex area of property law. Appointing a solicitor can take away any unnecessary headaches when it comes to stamp duty in Ireland and property purchase, as a whole.

 

At McGinley Solicitors LLP, we have been dealing with stamp duty payments for 35 years, ever since we were founded back in 1988. We offer a professional approach, which is designed to streamline the process and get buyers into their new homes as soon as possible.

 

After an initial consultation, we have three offices across Dublin and Donegal where we can continue the procedure, and move it toward its conclusion. If you are still unsure about stamp duty, the costs involved and whether it applies to you, please fill in the contact form or give us a call.

 

We aim to simplify and speed up the process in order to take the hassle out of any property purchase, so please get in touch.