THE recent Finance Bill which enacted into law the majority of items outlined in Budget 2011 back in December contained mostly bad news for us, the taxpayer.
Certainly, having received the first pay packet of 2011, all of us will have less in our pockets than 12 months ago.
However, one item which sounded a positive note, was the most radical reform of the property market in many a year.
Whether it can help to revive the property market which is still in a catatonic state remains to be seen.
The change which will affect most people is the massive cut in stamp duty for those buying a residential property. (This of course assumes that the banks will give you the financing for this move)
A flat 1pc rate for residential properties costing up to €1m has been introduced, with a rate of 2pc applying to any balance greater than €1m.
This, of course, compares very favourable from the highest rate of 9pc which had previously existed.
First-time buyers will now have to budget for stamp duty when they are looking at financing the purchase of a home, while generally those second time buyers looking to either trade up or trade down should be anticipating a saving compared to if they have bought pre Budget 2011.
An example is useful to illustrate this change for both sets of buyers.
Mark, a first time buyer, is looking at purchasing an apartment costing €300,000.
At the current rate he will have to come up with €3,000 on top of the purchase price to cover the stamp duty. Under the old rates, Mark would have been exempt.
Jennifer is looking at trading up from the current two up, two down she lives in now that prices have become more affordable.
She is very keen on a property not far from her current one which is asking €500,000. Under the old regime, Jennifer would have had to find a cheque for €26,250 to pay for the Stamp Duty on this purchase. Now that she has waited until after the Finance Bill has come into law, she will only have to pay €5,000 in duty, a rather substantial saving of €21,250.
The new stamp duty rates will apply to any conveyances, transfers or leases executed on or after December 8, 2010, while transitional measures will ensure that any purchaser, who has contracted to buy residential property before that date and completes the purchase before July 1, will not be adversely affected by the new rules.
The passing of Budget 2011 into law has also confirmed the abolition of many existing reliefs and exemptions for acquisitions of residential property.
The much vaunted and advertised first-time buyer relief which we all remember in glossy property ads from the Celtic Tiger era is no longer.
Other reliefs and exemptions abolished are the relief for purchases of new property by any owner-occupier, relief for the transfer of a site to a child and the exemption which existed for purchases not exceeding €127,000.
Under the old rules, where residential property was transferred between relatives, a 50pc reduction in the stamp duty on the transaction applied.
This was a very useful and much used 'consanguinity relief'. This has also been abolished.
The final major changes relate to property incentives. These were the increased allowances and schemes which were used in a major part to fuel the property boom.
The main points to note for people who invested in these properties are as follows:
To sum up, the passing of the Finance Act 2011 has imposed the most radical changes on the property market in many years.
They will have an impact not only on those looking to acquire property, but also those investors who built up property holdings over the last decade.
Simon Ball is is a tax adviser at SB Tax Consultants. firstname.lastname@example.org