Stamp Duty –

Residential Development Refund Scheme for non-residential land

BACKGROUND

• Section 83D of the Stamp Duties Consolidation Act 1999 provides for a refund to both single dwelling units and multi-unit developments
• The date construction works commence has been extended from 31 December 2022 to 31 December 2025

SINGLE DWELLING UNITS

Conditions to meet

• Land only is transferred
• A stamp duty return is filed and duty paid at the rate of 7.5%
• Limit on area of land to qualify for a refund – dwelling and curtilage up to 0.4047 hectares
• Construction work must commence on the land within a period of 30 months running from the date of transfer of the land
• Construction work must be completed within 30 months of a local authority confirming a commencement notice as valid

Claiming refund

• A refund can be claimed once construction work commences
• A time limit of 4 years arises to make a claim, running from the date a local authority acknowledges a commencement notice as valid
• The refund is the difference between the 7.5% duty and the old rate of 2%, which is eleven fifteenths of the 7.5% rate

Clawback

• A refund may be clawed back if construction work is not completed within 30 months of a local authority acknowledging receipt of a commencement notice

MULTI-UNIT DEVELOPMENTS

Conditions to meet

• Land only is transferred
• A stamp duty return is filed and duty paid at the rate of 7.5%
• 75% test:-
  (a) No less than 75% of the total surface area of the land must be occupied by dwelling units or
  (b) The gross floor space of the dwelling units must account for at least 75% of the total surface area of the land
• A commencement notice is served at each phase of a development and where the 75% test is met a refund can be claimed. If however a particular phase does not meet the 75% test but where the 75% test will be satisfied for an entire development, then a developer can opt to defer the claim until construction works commence on the final phase of a development. A refund can however always be sought for earlier phases where such phases satisfy the 75% test
• Construction work must commence on the land within a period of 30 months running from the date of transfer of the land
• For a phased development each phase must be completed within 30 months of a local authority confirming a commencement notice as valid
• The date of completion of a phase is the date a Certificate of Compliance on Completion is registered by a local authority

Claiming refund

• A refund can be claimed once construction work commences, and should not be made until the 75% test is satisfied
• A time limit of 4 years arises to make a claim, running from the date a local authority acknowledges a commencement notice as valid
• The refund is the difference between the 7.5% duty and the old rate of 2%, which is eleven fifteenths of the 7.5% rate

Clawback

• A refund may be clawed back if construction work is not completed within 30 months of a local authority confirming a commencement notice as valid (for each phase), or
• where the 75% test is not satisfied when construction works are completed

Analysis

• Extension of the date to commence works from 31 December 2022 to 31 December 2025 is welcome
• The 75% test to claim a refund may be viewed as too rigid for developments that comprise largely houses, as roads, green areas and footpaths often make up more than 25% of the land.

For further information on this topic, please contact Godfrey Hogan at ghogan@reddycharlton.ie