Revenue clamping down on stamp duty exemption fraud

[BillG]

The Revenue has opened a new front in its battle against tax evasion by targeting up to 100,000 Irish property investors who have availed of owner-occupier relief on stamp duty in recent years.

finfacts.com/irelandbusiness … 8876.shtml

[The_Unwelcome_Guest]

Revenue acts on abuse of stamp duty relief

John Downes

Thousands of property owners could face fines or other penalties as a result of a Revenue clampdown on abuse of stamp duty relief. The Revenue exercise is targeting individuals availing of owner-occupier stamp duty relief who rent out their properties within five years of purchase.

The relief claimed is supposed to be paid back in such circumstances.

The Revenue is currently conducting a pilot project in the Dublin area involving a random sample of 1,000 transactions from 2003 where purchasers availed of full “owner- occupier” relief on new properties with a certified floor area of less than 125sq m.

This is due to be completed in March, when it could be extended to cover other areas of stamp duty relief, including a more specific focus on first-time buyer relief.

The pilot project is understood to have already indicated a significant level of non-entitlement, with one conservative estimate placing this at “more than 10 per cent”.

According to Revenue figures, there have been more than 65,000 claims for owner-occupier exemption between 2000 and 2004, by both first-time buyers and previous property purchasers.

If the decision is taken to extend the investigation, thousands of individuals could face significant fines and other penalties. Another option is prosecution in the courts.

The Revenue has acted in response to concerns that individuals may be wrongly applying for the owner-occupier relief when purchasing a property. Instead of living there for the required five years from the date of execution of the deed on the property, they are renting it out without paying back the relief plus interest due - known as “claw-back” - as required by law.

Owner-occupiers are, however, allowed to rent out a room under the “rent a room” scheme.

“The individuals involved [in the pilot study] have been contacted by Revenue and requested to furnish specific information,” a Revenue spokesman said. “In some cases a visit by Revenue staff to the property was necessary. A number of cases are now the subject of a tax audit by Revenue.”

The Revenue is anxious to encourage members of the public to contact it directly with any concerns they might have about owner-occupier relief they have been granted. By doing so they can also significantly mitigate the penalties which they may face.

However, at a minimum they will have to pay back the relief owed plus interest.

It is understood that a particular focus of the Revenue investigation will be on investors who may have used the relief as a springboard to put together a portfolio of properties - rather than as a means of owning and occupying their own home.

When the results of the completed pilot project have been analysed, the Revenue will decide whether to examine the wider field of owner-occupier exemption claims since 2000, the spokesman said.

Typical levels of stamp duty relief for owner-occupiers vary. Stamp duty, which is calculated as a percentage of the cost of purchasing the property, can be as high as 9 per cent of the price.

© 2007 The Irish Times

[soma]

Earlier than I expected - I was anticipating this happening in the next year or two to “compensate” for the drop in tax take when the market slows.

[bearishbull]

@soma

Earlier than I expected - I was anticipating this happening in the next year or two to “compensate” for the drop in tax take when the market slows.

Will take a few years to see significant takes from this i reckon.

[Howitzer]

@soma

Earlier than I expected - I was anticipating this happening in the next year or two to “compensate” for the drop in tax take when the market slows.

This needed to be done sooner rather than later because of the push from a number of political parties to abolish or radically alter this tax. It’s a bit tough (politically) to prosecute people for evading a tax which no longer exists.

[The_Unwelcome_Guest]

@bearishbull

@soma

Earlier than I expected - I was anticipating this happening in the next year or two to “compensate” for the drop in tax take when the market slows.

Will take a few years to see significant takes from this i reckon.

I can’t imagine you’d ever see significant takes from it.

[whizzbang]

looks like the revenue are starting to set up their rainy day fund! This could add up to quite a bit of money not only from stamp duty but also from the tax due on undeclared rental income.

[Eirmail]

Agreed , normal stamp duty receipts will be down a lot this year. The lower volume of properties been bought will be a bigger factor the the lower prices.

[Calina]

it’s the interest and penalties that will drive things up beyond the nominal value of the stamp duty avoided in the first place…Sure it won’t be riches, but it may well not be negligible either.

[Open_Window]

@whizzbang

looks like the revenue are starting to set up their rainy day fund! This could add up to quite a bit of money not only from stamp duty but also from the tax due on undeclared rental inco me.

If we only have 80,000+ properties registered with the PRTB but knowingly we have estimates out there that put the private rental sector well over 200/300K mark in terms of units. In reality I say the scope for some of the biggest tax non-compliance by the large minority of the public is an issue/scandal just waiting to explode, a story untold if you will.

While it seems there is no political will to even touch this one (for obvious reasons, even tough their are more tenants than vested interests). I think the Revenue is now becomming such a well oiled machine that it will start to indirectly shake up the status quo in many areas this one included by clamping down on groups who have done a little “too well” in the last few years & decades.

I can live hope

Also, I believe an more open off shoot of the land registery (whom have excellent online services) in the form of a Central Housing Registry for the entire country that was open would serve us very well.

It would take less than a year to find out who owns what and how many.

Its prudent house keeping!

[BoyRacer]

Revenue targets landlords in rental income crackdown → independent.ie/business/pers … 39345.html

Tax officials are making door-to-door checks in estates across the country to see if landlords are paying all their taxes.
Revenue officials are focusing on estates where there is known to be a high level of rented properties in the new clampdown on landlords.
They are probing landlords who have buy-to-lets to see if they are making the correct tax claims on their rental returns and to see if they are registered with the State as landlords.
It is part of an overall investigation by Revenue Commissioner officials into the black economy, the Irish Independent understands.

there is more

[mr_anderson]

@BoyRacer

Revenue targets landlords in rental income crackdown → independent.ie/business/pers … 39345.html

Tax officials are making door-to-door checks in estates across the country to see if landlords are paying all their taxes.
Revenue officials are focusing on estates where there is known to be a high level of rented properties in the new clampdown on landlords.
They are probing landlords who have buy-to-lets to see if they are making the correct tax claims on their rental returns and to see if they are registered with the State as landlords.
It is part of an overall investigation by Revenue Commissioner officials into the black economy, the Irish Independent understands.

there is more

Hmmmm, I seem to recall we had a mention of this on a thread not too long ago, where a poster had them knock on their door.

[temene]

Must be a slow news day. Indo rehashes a story.
viewtopic.php?f=4&t=26288

[Renting_And_Proud]

Wonder how much money was sacrificed over the “boom” years by revenue not bothering to chase people?

My OH works in a place where they can buy discounted shares once a year. BIK is supposed to be paid on the discount but it’s left to self assessment rather than done by HR. From time to time an odd person is sent a Form 11 to submit but the vast majority don’t bother declaring. This is despite the fact revenue are given a list of participants each year