22 May 2017
So you’ve scrimped and saved and now you’ve pulled together enough money for the deposit of your dream home. Congrats! But there may be a kicker as there are a bunch of extra hidden costs that go along with buying a house. It’s frustrating we know, but you’re nearly there!
So what do you need to account for? Some of the snags include:
Stamp duty sticks out like a sore thumb on the list, doesn’t it? The others are reasonably self-explanatory and straight forward. Stamp Duty, however, doesn’t exactly have the same feel to it.
Not to worry – we’re here to give you all the info you need before you get the wallet out.
So what is Stamp Duty?
Time for a quick history lesson. The name “stamp duty” comes from the fact that to be legally binding, a physical stamp had to be attached to or impressed onto a document (such as a court document or cheque) to denote that stamp duty had been paid.
But these days, it’s very much a modern day concern for first time buyers. To use the ‘technical’ term, stamp duty is a duty levied on the legal recognition of certain documents – in this case, it’s a charge on the legal documents involved in the transfer of a house.
Why do I need to pay?
During the announcements of Budget 2011, the finance minister at the time said he would relieve stamp duty payments by reducing the rates for the tax. Hurrah! However, reducing the rates for the tax came with a sting and the removal of exemptions around stamp duty. One of the exemptions was around first time buyers.
The reasoning, according to the government at the time, was that charging stamp duty on every property transaction meant they could track purchase prices of homes. Since then, stamp duty is one of the mandatory charges that comes along with buying a house in Ireland.
How much do I need to pay?
In the time preceding the changes in 2010, there were a lot of complex rules and regulations surrounding stamp duty payments in Ireland, and higher rates to boot!
The changes simplified this and 1% is paid on any property transaction worth up to €1,000,000, with 2% payable on any additional balance. So a property priced at €200,000 will incur stamp duty of €2,000, whereas a property costing €2m will be 1% on the first €1m and 2% on the second €1m, giving a total stamp duty bill of €30,000 (a bit eye-watering to say the least).
How do I overcome these extra costs?
Unfortunately, you can’t really work your way around paying stamp duty. However, some considerations do apply. These include:
So there you have it: your options in a nutshell. Now you’re armed with info on what stamp duty is, you’ll be even better equipped on your house hunt. Happy hunting!
Are you thinking of buying your own home?
Does the thought of picking up the keys to your own place appeal to you? It couldn’t be easier to find out if you’re eligible for a mortgage. Simply call into your local EBS office for a chat with one of our friendly mortgage advisors.
Get the ball rolling with our First Time Buyer guide.
Don’t forget to visit our Facebook page for the latest home inspiration, news and great competitions.
The content of this blog is expressed in broad terms and is limited to general information purposes only. Readers should always seek professional advice to address issues arising in specific contexts and not seek to rely on the information in this blog which does not constitute any form of advice or recommendation by EBS d.a.c.
EBS d.a.c. neither accepts nor assumes any responsibility in relation to the contents of this blog and excludes all warranties, undertakings and representations (either express or implied) to the fullest extent permitted under applicable law.
EBS d.a.c. is regulated by the Central Bank of Ireland.