The Ministry for Finance and
Employment has prescribed rules that grant income tax and stamp duty exemptions
on certain property transfers. The rules have been published in Legal Notice
461 of 2021.
The new tax benefits apply to
transfers that are made on or after 12 October 2021 but not later than 31
December 2024. They do not apply to transfers of property to persons who
require an AIP permit. (In the case of transfers of property situated within
special designated areas, and which are therefore not subject to AIP permit
requirements, the exemptions are available only as long as the purchaser is not
a person who would require an AIP permit had the property been situated
elsewhere.)
The benefits are granted under the following three schemes:-
The first scheme applies to buildings that were constructed
at least 20 years before the transfer, as confirmed by an architect’s report,
and that have been vacant for at least 7 years and still vacant at the time of
the transfer, as confirmed by a certificate from ARMS. The Commissioner may
require further or alternative evidence. The benefit under this scheme is an
exemption from income tax and an exemption from stamp duty on the first €750,000.
When the transfer value is higher than €750,000, the
excess is taxed at the normal rates.
(Where the Eighth Schedule is applicable, it would qualify
as an architect’s report.)
Property situated within an urban conservation area
The second scheme applies to property situated within an
urban conservation area, as confirmed by a certificate from the Planning
Authority and by any further evidence that the Commissioner may request. Again,
the benefit is an exemption from income tax and from stamp duty on the first
€750,000. When the transfer value is
higher than €750,000, the excess is taxed at the normal rates.
Property developed in accordance with established guidelines
The third scheme applies to transfers of property that is
subsequently developed in accordance with the established guidelines and
approved by the Board appointed by the Minister responsible for Finance. The Board will monitor and approve property developments
in those cases where the owner applies for the duty benefit under this scheme.
Under this scheme, the benefit consists of an exemption from
stamp duty on the first €750,000. The exemption is granted by way of a refund: income
tax and stamp duty must be paid on the contract at the normal rates, but the buyer
can then apply for a refund of the stamp duty, which will be given once the
property is developed, and the development is approved by the board.
Loss of benefits
The benefits are subject to the condition that the property will
not be demolished and that it is not divided into more transferable units than
the units comprising it at the time that it was acquired or, in the case of the
third scheme, at the time that the development was approved. Breach of this
condition will result in a loss of the benefit and the amount of the benefit
(the total amount of exempt income tax and stamp duty under the first two
schemes and the amount of the exempt stamp duty under the third scheme) will
have to be paid to the Commissioner.
When a transfer that qualifies under these schemes qualifies
also for the stamp duty benefit available on donations to descendants of a
residence or of property to be developed as a residence, the parties have the
option to choose whether to claim that benefit or the benefit under these new
schemes.