Taxes You Need to Consider When Buying a Home in Ireland

Taxes You Need to Consider When Buying a Home in Ireland


Buying your first home is a reason to celebrate. But before you pass out the party poppers, make sure you’ve done everything by the book – And that includes paying the correct taxes that all property purchasers have to stump up when buying a home in Ireland.


So to help you out we’ve put together a step-by-step list of taxes you need to consider when purchasing an Irish property.


READ: Important Things to Know Before Taking out a Mortgage


Stamp Duty


The main tax you need to be aware of when buying property in Ireland is stamp duty. This is a government tax that you pay when property ownership documents are transferred to you.


The property in question could be a second-hand home, a brand new-build, an apartment, a derelict cottage or another kind of home, or land.


The amount of stamp duty you’ll pay depends on the overall value of the property. For homes valued up to €1 million, the rate is 1% of the overall value. For new pads priced over the €1 million mark, the rate is 2%.



Buying a Non-Residential Fixer-Upper


If the property you’ve set your sites on is actually an old church, commercial building, or schoolhouse that you’re intending to renovate as your new home, you’ll need to check with your local authority to ensure that the building is regarded as a residential property as this might affect the amount of stamp duty charged.


Non-residential buildings will be charged at the heart-squeezing increased rate of 7.5 %. And though you may be able to get two-thirds of that back through the Residential Development Stamp Duty Refund Scheme, it can be a lengthy process.


There are a few situations when stamp duty is off the table, but these pertain to direct property transfers and will likely not apply to you if you’re laying cash down for your first home.


But still, it can be helpful to know. The situations include:

  • Property transfers between spouses and civil partners
  • Property transfer of a cohabitant to his or her cohabitant
  • Property inheritance transfers
  • Property transferred between former spouses or civil partners under a court order, such as in the event of divorce or the dissolution of a civil partnership.


When to Pay Stamp Duty


You’ll need to pay stamp duty within 30 days of the property transferring to your name or face a hefty penalty of 30% of the duty.


So bottom line – make sure you have the funds to fork out for stamp duty when you’re buying a house.


RELATED: Costs to Consider When Buying Your First Home


Value Added Tax (VAT)



If you’re buying a second-hand home, VAT doesn’t apply.


But if your heart is set on a new build from a developer then you will be charged VAT at 13.5%. However, this will affect the amount of Stamp Duty you’ll have to pony up.  That will be charged only on the value of the property before the VAT has been added.


So, for instance, if your new dream home comes in at €300,000, VAT at 13.5% on top of that that rings up the cash register to a final price of €340,500.


However, you’ll only have to pay stamp duty on the base price of €300,000, which at 1% means adding on an extra €3000.


Local Property Tax


The next tax to be mindful of is Local Property Tax (LPT).  The Local Property Tax is an annual self-assessed tax that all residential property owners have to pay. It’s based on the market value of your property and paid to the Revenue Commissioners.


The next valuation date is 1 November 2021. This basically means that if you own a property on this date then you are liable for LPT and the tax you pay is based on the market value of the property at this time.


RELATED: All You Need to Know About the Local Property Tax (LPT) for 2022


You have to submit your valuation within the seven days following the valuation date, and then pay the tax accordingly.


Guidance on Valuing Your Property


If this sounds complicated, it’s not really. Though Revenue doesn’t value your home on your behalf, it does offer guidance on how you can do it including using their own calculator to work out the amount payable.


Additionally, you can find more useful details on the Residential Property Price Register and through comparisons of local properties on websites such as ours -


In terms of paying the tax, there are a few different options available. You can settle the bill in one single payment or pay over a series of instalments throughout the year.


Reliefs & Loans Available


While Stamp Duty, VAT and LPT are necessary evils when buying an Irish property, the good news is that there are a couple of reliefs available.



Help to Buy (HTB) Incentive


If you are a first-time buyer intent on getting the key to your home before the end of the year, then you may be eligible for the Help to Buy Incentive.


This is a government-supported plan aimed at helping you with the 10% deposit you need to buy or build a new abode.


Under the scheme, potential property owners can receive a refund or rebate of Income Tax and Deposit Interest Retention Tax (DIRT) paid over the previous four tax years up to a maximum of €30,000.


Of course, there are certain criteria needed to qualify. For starters, you must be a first-time buyer and that means never having owned a crib of your own at home or abroad. If you’re applying for the HTB with a partner, they too have to be a newbie on the property ladder.


Also, you must be borrowing at least 70% of the value of the property you want to buy or build, and the property price must be €500,000 or less.


The Help to Buy (HTB) Incentive was originally due to end in December 2020. However, the government decided to extend it until the end of 2021 with an enhancement introduced in the July stimulus last summer.


Whether it’ll continue after that is up for discussion as part of Budget 2022 – but we’ll keep you updated!


Rebuilding Ireland Home Loan (RBIHL)


The Rebuilding Ireland Home Loan is a government-backed mortgage for first-time buyers who’ve been turned down for a mortgage - and can prove it - from at least two traditional lenders (Bank of Mum and Dad doesn’t count!)


Available through local authorities, it was launched in January 2018 with funding to the tune of €200 million.


RELATED: The Ultimate Guide to the Rebuilding Ireland Home Loan


Unlike the above Help-to-Buy Incentive, which honed in on helping first-time buyers buy a home, the RBIHL can be used to purchase a new or second-hand property or, of course, to self-build.


Though the rates on borrowing are quite steep coming in at 2.745% for borrowing up to 25 years and 2.995% for loans of up to 30 years, on the positive side the rates are fixed which means you’ll always know what your repayments are, intel which is not available to borrowers in the open market.


On top of that, the loan offers up to 90% of the market value of the home or land you want to buy – which is another great incentive for would-be h0me-buyers counting their pennies.