Irish Times
Thousands of first-time home buyers are facing significant tax bills following a clampdown by the Revenue Commissioners. People buying second-hand homes with the help of their parents could find themselves confronting an unexpected stamp duty charge of thousands of euro that they have not budgeted for.
The loss of stamp duty relief will affect most severely those who are on relatively low incomes or whose parents are not able to provide an outright cash gift to help them buy a home.
The Beautiful Room -
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another vote winner for FF ?
Why not run a book on how many days before this little provision gets changed ?
1,197 people agree with me.. how many agree with you ?
Not so easy to change. The relevant provisions are in the Stamp Duty Act and the Finance Acts so it will take more than a minesterial order to change.
I don't think you could open a book on it RoC, as it's a racing certainty they'll try and jump on the Revenue and squash it.
Yet again, more disjointed government. This may well be a drafting problem, or to be more accurate a re-interpretation of existing law by the Revenue. I'm aware of another re-interpretation of rules that's happening re the Business Expansion Scheme (which they won't admit to) that is causing some consternation (maybe I'll post on that when I've done some more work on it). Some of the re-interprations are being driven by the European Commission (consistency of treatment within the EU) and by the review of tax breaks that is ongoing.
Whatever's going on it looks as if one branch of the Government isn't talking to the other about how legislation passed in one area impacts on another. What's even stranger is that this should have been anticipated. People didn't just start having to guarantee their children's mortgages yesterday, this has been going on for a long time.
There was plenty of time to amend legislation, after it was announced in the budget, so that this problem didn't occur. Could the guarantee given by parents not be treated as a gift - The value being maybe the amount of interest paid on the portion of the loan guaranteed. The value of this gift could then be applied to their lifetime CAT threshold, and in most cases no tax would be payable.
It's a pity to see this treatment being meted out, but not a surprise as it's a soft captive one. The emphasis should be on getting tax evaders (they haven't gone away you know!) and not on law abiding taxpayers trying to set up a home.
This issue has been misrepresented. Parents can continue to:
Loan their children the funds to purchase the house
Guarantee the mortgage
Give their children the funds for a deposit
They may not jointly sign the deeds with their parents…
I think you've missed the point.Originally Posted by TKwhiskers
Everyone knows parents can still give their children loans and funds/gifts - There's been no problem about that - so why do you mention it?
With regard to guarantees - Yes I agree - looking at it further, and listening to a few more contributions, the Revenue may not target these to chase people for stamp duty.
However, when it comes to joint signature, it's 100% definite that the Revenue are trying to get stamp duty out of these cases, and it's been conceded by Noel Ahern that this has occurred because of the Revenue's interpretation of the legislation and rules.
So barring doubts on guarantees - How has this issue been misrepresented?
It appears you're both wrong, and that the issue is who provides the money. This is from the Irish Times article:I think you've missed the point.
Everyone knows parents can still give their children loans and funds/gifts - There's been no problem about that - so why do you mention it?
In guidance issued to solicitors last month, the Revenue stated: "To qualify for the relief, the entirety of the purchase monies, including any borrowings, must be provided by the first-time buyer.
"Any person who provides part of the purchase monies or who is party to any borrowings relating to such purchase is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first-time buyer."
Worth breaking my "no sig" rule for:
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The key phrase is the one I've bolded from the quote. it's not about who provides the money, it's about the Revenue looking through the transaction and deeming guarantors (possibly) and co-mortgagees (even if they're just supportive parents) to be part owners of the property.It appears you're both wrong, and that the issue is who provides the money. This is from the Irish Times article:I think you've missed the point.
Everyone knows parents can still give their children loans and funds/gifts - There's been no problem about that - so why do you mention it?
In guidance issued to solicitors last month, the Revenue stated: "To qualify for the relief, the entirety of the purchase monies, including any borrowings, must be provided by the first-time buyer.
"Any person who provides part of the purchase monies or who is party to any borrowings relating to such purchase is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first-time buyer."
If the transactions concerned were pure investment transactions then I could go along with the Revenue's tack, but if these transactions are to genuinely assist first-time buyers I can't.
I return to my earlier point that this is a drafting problem that could have been easily avoided. They need to sort it out.
Ok to end all debate here and clarify the situation. My office has been particularly busy this morning with parents/relatives and their offspring worried sick so here it is in simple terms( and revereie who is a tax accountant can clarify this for anybody particularly worried. if you pm him--ok by u revereie?)
1). Anybody who recieved a sum from their parents/donors towards a house and parents filed a disclaimer of interest in the said property and accounted for the source of the loan/gift and this being tax compliant are not liable for anything.
2).Those who will be liable
A) parents/donors who made a cash donation without doing the above(an appeal can be made to revenue but in instance 1 above all the conditions must be met.)
B)Parents who made a cash donation and guaranteed the mortgage by signing a share in the house .
(A simple guarantee of mortgage and signing a declaration of no interest in the propery and there is no liability.)
The reason this whole thing has come to the attention of revenue is that quite a number of people in the state have been using their children to acquire second third and in some cases several properties to avoid stamp duty.
Also in some instances cash that was not declared for tax was used for deposits on these properties.Later on down the line these properties are passed on to siblings or sold a t large profit where the parents and sibling both benefitted from the cash dividend.
Unfortunately a lot of innocents have been caused a lot of anguish by greedy individuals and the press for scaremongering and breaking stories without checking facts.
However revenue have explained to a colleague that each case will be treated sympathetically,if it is a simple case of forgeting to fill in paperwork but very few of these cases exist in the trawl they have so far done as any conveyency solicitor or accountant or lending institution should have advised the clients of the possibility of this happening and about filing the proper paperwork.
Tk whiskers is right on all of his main points.Parnells interpretation of the IT article is wrong as the article itself is wrong as ownership of property is determined by the names on the title deeds ie the named and the bank.
The guidelines to solicitors are open to legal challenge as this is revenues interpretion of ownership not the legal definition of ownership- the name on the title deed.
Also exemptions for duty apply to all new houses under a certain square footage and value-- be aperson first or second time buyer so long as the property is the prime residence of the purchaser -hope this is of help
But the piece quoted from the Revenue's own guidance seems to contradict that: "Any person who provides part of the purchase monies or who is party to any borrowings relating to such purchase is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first-time buyer."Tk whiskers is right on all of his main points.Parnells interpretation of the IT article is wrong as the article itself is wrong as ownership of property is determined by the names on the title deeds ie the named and the bank.
The guidelines to solicitors are open to legal challenge as this is revenues interpretion of ownership not the legal definition of ownership- the name on the title deed.
Is this a selective quote from the guidance by the Irish Times? Because otherwise it seems pretty clear.
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