The Revenue Commissioners have confirmed that first-time buyers receiving financial assistance purchasing a home risk losing their entitlement to stamp duty relief.
The Irish Timestoday reported that the Revenue Commissioners had issued an advisory saying the levy would apply when parties, who are not first-time buyers, are involved in the purchase of the home.
It says: "The entirety of the purchase monies, including any borrowings, must be provided by the first time buyer.
"Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer."
The Revenue said today this applies irrespective of whether all those funding the purchase are named on the deed of transfer. However provided only the first-time buyer is named on the mortgage the relief will still apply.
A cash gift would not preclude the first-time buyer claiming the relief, the Revenue said. "Therefore where someone who is not a first-time buyer acts as ‘guarantor’ for a loan this will not result in the loss of the relief."
"In Revenue’s experience the issue relates to a limited category of borrowers who are buying a house by way of a mortgage on which a parent or other relative is a co-borrower, and where the house is normally second hand."
The statement denied there had been a "clampdown" on stamp duty relief and added there was "nothing new in the way Revenue applies the legislation".
The Stamp Duty Consolidation Act 1999 is the governing legislation, with frequent amendments made by the Minister for Finance at Budget time. Rates vary from zero to 9 per cent depending on the value of the property but first time buyers are exempt provided the homes costs less than €317,500.
Due to the high cost of housing many young people receive financial assistance in purchasing their first home - usually from parents.
Fine Gael senator Brian Hayes believes the Revenue interpretation of the regulations are "absurd" and "a scandal", given that Government policy is to encourage more people onto the property ladder.
"I have come across a number of cases where the first-time buyer has been levied with a hefty stamp duty because they received help towards a deposit for a new home. It now seems that first-time buyers have been made liable as a result of the Revenue interpretation" Mr Hayes said.