Here’s another normative question as per the land banking post last week. When is a new property a new property? The question arises because cash-strapped developers have been renting out the properties they have been unable to sell (see here for more details). As far as the Revenue Commissioners are concerned this means that the property now becomes ‘second-hand’ and therefore liable for stamp duty except for first-time buyers. It seems that the stamp duty exemption only applies if the property is sold immediately after construction or are not lived in prior to sale. The CIF and the developers it represents wants a change so that the properties are considered ‘new’ up until the first time they are sold. Their argument is that it penalises developers for trying to find a cashflow and make ends meet by making the units less attractive to buyers (who have to pay the duty). And by default, it penalises buyers who previously wouldn’t have been liable for the duty. The flip side is that the property is clearly not ‘new’ in the sense that people have been living in it and, at a time when the state needs all the revenue it can generate, any change in the rules will deny a source of duty. So, the question is – at what point does an unsold property stop being a new property? When it is first lived in or when it is first sold?
Rob Kitchin
Ireland after NAMA 
September 20, 2010 at 9:58 pm
This seems bad for buyers and also even worse for cash strapped developers with an excess of unsold housing stock. If a house has been rented and lived in it can’t really be classed as ‘new’. Perhaps there is a need for Revenue to look at options for housing units that have been unsold but ‘used/rented’ by developers over a short term period (1-3 years).
After that – a lick of paint, the removal of a used set of IKEA furniture and a significant reduction in the original asking price and there might be some buyers.
I’d say anything that has been unsold but lived in for more than a few years should stop being classed as a ‘new’ property.
September 21, 2010 at 6:45 am
Stamp duty will be replaced by an annual tax on land and buildings.
Rent it out anyway. If, IF!, you can. The banks are going to get it anyway! The more competition, the lower the rents. We will become more competitive whether we like it or not!!!!