Section 61 of the Finance Act 2017 provides for the Residential Development Stamp Duty Refund Scheme. Under this scheme, a person who has had land transferred to them by deed dated on or after the 11th October 2017 and has paid the non-residential rate of 6% stamp duty may claim a refund of up to two-thirds of the Stamp Duty paid, in circumstances where the property is being developed for residential purposes. The applicant may only make the claim after the building work has commenced. The claim must be made electronically.
To qualify for the refund the applicant must commence building work:
- after the date the local authority acknowledged the Commencement Notice,
- within 30 months after the date the land was transferred to the applicant,
- on or before 31 December 2021.
Where a development is carried out in phases, it is sufficient for the applicant to commence building work on the first phase within the 30-month period. “Building work” includes site clearance, drainage, earth-moving, excavation and the laying of foundations. It also includes the provision of access such as roads. An applicant must complete the building work within 2 years after the date the local authority acknowledged the Commencement Notice. Where a development is carried out in phases, the 2-year completion period applies to each phase. When building work is completed, a Certificate of Compliance must be submitted to the local authority. The completion date is the date the local authority registers that Certificate.
In the case of a one-off house, such a refund is not given for any area around the house which exceeds 0.4046 hectares (1 acre). With such houses, an applicant has the right to opt out of the local authority certification process. If the opt out is exercised, the completion date is the date of the Electrical Completion Certificate – this is issued when the house is connected to the electricity network. Further, an applicant does not have to satisfy the ‘75% required proportion’ test referred to below in relation to a one-off house.
The proportion of the land to be developed
There are two alternative tests to determine if the appropriate area of land has been developed to qualify for the refund. The tests ensure that a reasonable part of the land is actually developed for residential purposes. In relation to a multi-unit development or a phase in such a development, one of the "75% tests" must be satisfied as follows:
- At least 75% of that total surface area must be occupied by houses or apartments.
- Alternatively, at least 75% must be accounted for by the gross floor area of the houses or apartments. The gross floor area is a measurement of the internal floor space of each floor of a house or apartment block. The measurement includes the internal walls and partitions.
Because one phase of a development alone may not satisfy either "75% test", but the entire development must satisfy one of the "75% tests" to qualify, in such cases a refund can be claimed when building work on the last phase of the development is commenced.
A refund cannot be claimed later than four years after the date on which the local authority acknowledges the Commencement Notice.
Clawback will apply when a claim was made but there was no entitlement to it, where the building work is not completed within the specified period, or where the relevant ‘75%’ test on completion has not been met.
The Revenue Commissioners have advised that their online application system will be functional at the end of July 2018. Further details on what is required to apply this will follow from the Revenue Commissioners when available.
For further information please contact any member of our Property Team.
30th May 2018
30 May 2018