Stamp Duty Refund Scheme: Development Land

Section 61 of the Finance Act 2017 (“Section 61”) introduced a Stamp Duty refund scheme where land is used for Residential Development. The manner in which Section 61 was drafted raised a number of questions regarding the scheme’s implementation, prompting the Revenue to, last Thursday issue, Revenue ebrief  no. 092/18  and a detailed updated section in the Revenue Operational manual for Stamp Duty  (see section 14 – pages 19-32). The refund scheme applies to land acquired after the 11^th October 2017 and will entitle buyers to a refund of a maximum of 4% of the 6% Stamp Duty paid (i.e. a 2/3 refund), in certain circumstances. The refund will only apply to the part of the property developed (buildings and curtilage) and there are time limits on commencing and completing development. The application for the refund can be made once the development commences. The following are some headline points on the scheme but each case would have to be looked at on its own facts;

• Construction Operations must actually commence on the land within the period of 30 months of the acquisition deed and service of a commencement notice without actually commencing the works is not a trigger to claim the relief.
• The scheme is not open-ended. Construction operations must commence on, or before, 31 December 2021 and a 2-year time limit is allowed for completion. This effectively means that the scheme will terminate on 31^st December 2023.

For a multi-unit development the completion date is the date a Certificate of Compliance on Completion is registered by a Local Authority.

• There are certain instances where the “clock is stopped” both in relation to the commencement and completion of works such as a Bord Pleanala Appeal or a Court order preventing works.
• In a phased development where separate commencement notices are required by a Local Authority, in respect of each phase of the development a refund can be only be claimed in respect of a particular phase, when construction of the houses or apartments in that phase has actually commenced.
• The aim of the scheme is to incentivise the delivery of a significant quantity of residential units and on completion of a development or a phase of a development, one of the following must be delivered in the completed scheme; 75% of the total surface area must be occupied by housing units; or the gross floor space of the housing units must account for at least 75% of the total surface area of the land.

The refund scheme will also apply to one off houses and in a typical 0.5 acre site (or smaller infill sites) it should enable the maximum 4% or 2/3 refund to be claimed.  In such cases, if the buyer has opted out of the BCAR regime (where a Certificate of Compliance on Completion is registered by a Local Authority) then the test for completion is the issuing of an Electrical Completion Certificate that is provided following connection to the electricity network. Revenue is presently updating their online platform to allow a refund application to be made online and this is expected to go live in July 2018. The Refund Application will be made on the usual self-assessment basis and it is subject to clawback if conditions such as those relating to the “75% Tests” are not met. The Revenue Operational Manual does contain worked examples to illustrate the operation of the scheme, which covers a number of different scenarios. One area of doubt is whether an existing non-residential building (with might have limited or no vacant land around it) constitutes “Land” to allow it benefit from the scheme, where works were carried out to convert it to a Dwelling Unit. It is noted that paragraph 1 of section 14.2.2 of the Revenue Operation Manual (which has just been updated) states that; “Where existing non-residential buildings are being converted for residential use, Revenue is also prepared to treat internal adaptation work as construction operations”.  This would seem to suggest that the commencement of work to convert the use of an existing building from Commercial to Residential, would entitle a buyer in such a case to the benefit of the Refund Scheme. We have raised a query with Revenue on this issue and await their reply.