Michael McGrath (Cork South Central, Fianna Fail)
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I assume the Deputy is referring to arrangements where:

an investor commits through a binding contract to purchase residential properties from a developer before they are completed (forward funding agreement), or

an investor commits through a binding contract to purchase residential properties from a developer upon completion (forward purchase agreement).

I am advised by Revenue that the standard rates of stamp duty applying on the acquisition of residential property are 1% on values up to €1 million and 2% on values exceeding €1 million.

Furthermore section 31E of the Stamp Duties Consolidation Act (SDCA) 1999 provides for a higher 10% rate of stamp duty to be charged on the acquisition of residential property situated in the State, excluding apartments, where a person acquires at least 10 such properties during any 12-month period.

Section 31E was drafted in broad terms to ensure that any acquisition of residential property in the State would come within its scope, regardless of how such acquisition was structured. The specified methods of acquisition are set out in section 31E(2).

These include the sale of land on which residential property is in the course of being built or is to be built. In accordance with section 29 SDCA 1999, where land is being sold and, in connection with that sale, a house or apartment has been, is being or is to be built on that land, the sale is to be treated for stamp duty purposes as if the land concerned were residential property.

Given the variety of methods of acquisition covered by section 31E, the acquisition of residential property using either a forward funding agreement or a forward purchase agreement should come within its scope. The precise stamp duty treatment of such an acquisition will depend on the specific facts and circumstances of the case.

However, it would generally be the case that in respect of forward funding agreements, the higher charge to stamp duty would be applied on the date that the investor purchases the land on which the residential properties are in the course of being built or to be built by way of a conveyance or transfer on sale. The higher charge would be applied on an amount equal to the aggregate of any consideration paid in respect of the sale of the land and any consideration paid (or to be paid) in respect of the building of the residential property on the land. Where it is not possible to determine the aggregate consideration at the time the contract is executed (e.g. where information regarding the cost of the building is not available) a multiple of 10 times the market value of the land is to be used as a basis for calculating the stamp duty liability.Forward purchasing agreementsIn respect of forward purchasing agreements, the higher charge to stamp duty would be applied on the date that the investor purchases the residential properties by way of a conveyance or transfer on sale.

Revenue has published detailed information on the higher 10% rate of stamp duty, including details on the specified methods of acquisition, which is available on the Revenue website at

www.revenue.ie/en/tax-professionals/tdm/stamp-duty/stamp-duty-manual/part-05-provisions-applicable-to-particular-instruments/section-31e-stamp-duty-on-certain-acquisitions-of-residential-property.pdf.