Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

Question 315: To ask the Minister for Finance if his attention has been drawn to arrangements whereby a developer can enter an agreement to build under licence on land owned by another party and the houses can then be sold exempt of stamp duty on the site that would arise if the developer purchased the land; and if this loophole has been closed. [10139/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

Stamp duty is a charge on documents, which are mostly legal documents, used in the transfer of property. Where a property is purchased or swapped, stamp duty is charged on the conveyance or transfer effecting change of legal ownership of the property concerned.

Under the stamp duty code, a developer can obtain a licence from a vendor to build on land owned by the vendor without incurring a stamp duty charge at that stage of the venture. Once the buildings, whether commercial or residential, are completed, the conveyances or transfers of such properties to purchasers are chargeable to stamp duty in the normal manner unless specific exemptions are available to such purchasers. A similar stamp duty treatment would also arise in a situation where a builder or developer contracts to purchase land from a vendor without taking legal title to the land. The developer might complete the contract and not take a conveyance but rather, under a power of attorney given by the vendor, have the power to convey completed buildings to the ultimate purchasers. The normal stamp duty charge will arise on conveyances or transfers of the newly built properties to sub-purchasers subject to any exemptions applying. In such cases, the stamp duty, if any, is paid but at a later stage.

Certain developments structured in the manner outlined above have come to the notice of the Revenue Commissioners and the situation is being kept under review. I have asked Revenue to let me know the outcome of their review and I will decide what action, if any, is required, bearing in mind the effect on the housing market and the cost to the Exchequer.