Richard Bruton (Dublin North Central, Fine Gael)
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Question 197: To ask the Minister for Finance if his attention has been drawn to the fact that many first time buyers who depend on parents to contribute to the cost of purchase are being ruled liable to stamp duty; and if arrangements will be made whereby a certificate confirming that the parents will take no beneficial interest from the home will suffice to obtain the intended stamp duty exemption. [23392/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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A stamp duty exemption for first time buyers of second hand houses under €317,500 was brought in by budget 2005. Previously it had applied only to houses up to €190,500, so the significant increase in the threshold made this exemption relevant to a much broader range of purchasers. Reduced rates of duty were also made available for purchases up to €635,000. The relief from stamp duty is intended to benefit only genuine first time buyers. It is, of course, essential that the stamp duty advantage intended for first time buyers should not be diluted by allowing persons who are not first time buyers circumvent the rules, by borrowing in tandem with another person who is a first time buyer. Revenue has always accepted that a person would not have been precluded from obtaining first time buyer relief where a parent provides funds by means of an unconditional gift towards the purchase of a house or where a parent acts as financial guarantor for purchase moneys which are borrowed by his or her son or daughter in connection with the purchase.

In a statement issued on Friday, 24 June, the Revenue Commissioners have offered reassurance to first time buyers in situations involving parents of first time buyers acting as co-mortgagors. The Revenue Commissioners are now prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances: the transfer of the house is taken in the name of the child; it is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house; the parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the moneys being advanced for the purchase; it is not intended that the parent will be contributing to the repayment of the mortgage in the normal course.

Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan. In these circumstances, the certificate envisaged by the Deputy would not be required for a first time buyer to obtain the stamp duty exemption. I am also advised that the Revenue Commissioners do not propose to seek a clawback of stamp duty where transfers have taken place before last Friday, 24 June, which comply with the conditions outlined above.