Stamp Duty loophole costs exchequer E250million pa: SBP

The SD loophole known as ‘resting on contract’ where land is notionally leased to developers is costing the exchequer E250million a year. The SBP states that 40% of land deals utilise this loophole. The government decided to close the loophole but Brian Cowen has reversed this because of fears about its potential impact on the property market! Social Welfare for landowners anyone?

It’s a heart-warming story…

More detail in here

Were Goodbodys ever likely to recommend taxing people who are most probably some of their biggest customers?

If I’m right from reading these two paragraphs:

Then these developers can give the same discount onto first time buyers but other buys get lumped with extra stamp duty… or would it be the same stamp duty that they would already have to pay?

So, simply put, the developer never buys the land, thus they don’t have to pay stamp duty on the transaction to buy it? Or is it more complex than that?

Sure what would we spend the money on anyway, we have all the infrastructure we need.

Does anyone else feel this is a storm in a tea-cup?

I mean, this method whereby the end-user only pays the tax on the item is exactly the same as the VAT system, no? If you tax the supplier on a wholesale transaction, then all other things being equal*, the cost is passed on to the end-user resulting in double-taxation. We don’t expect car dealers to pay VRT and then for the customer to pay VRT a second time.

  • lets ignore the current market situation for the sake of debate, we shouldn’t just chop and change taxation methods based on boom/bust cycles. Increase/decrease taxation rates to iron out the excesses is fair enough.

But if I buy a run down house to fix it up and sell on or a cottage that is only fit to be kncoked I have to pay stamp duty on the transaction.
My intention, like the large developers would be to move the property on eventually at a profit.

How many of these developers have used this tax avoidance measure are currently renting out their properties because they can’t sell them.
How many are holding on to properties in completed developments that this avoidance measure was used for.

It seems to me that it is a legitimate(as the law currently stands) tax avoidance scheme that only wealthy developers can exploit.
Seems to me that it isn’t something that should be allowed in a fair society but then again 9% stamp duty level isn’t fair either.

Fair point - the wholesale transaction shouldn’t be taxed in either case imho. If a car dealer accepts a traded-in car through the trade, I assume he doesn’t pay VAT to the main dealer that he cannot subsequently write off against the eventual sale? Should be the same principal regardless of size.

Now that is a very good question…

That wasn’t you leaking information was it kerrynorth? :confused: