As indicated in our earlier briefing, in order to dis-incentivise any attempts to circumvent the measure by a series of smaller purchases, the new rate will apply where ten or more residential units are acquired on a cumulative basis over a 12 month period. The purchase of the tenth unit will trigger the retrospective application of the 10% rate to the previous nine purchases. Units purchased before 20 May 2021 will count towards triggering the threshold of ten, but the new rate will only apply to units acquired on or after that date. The financial resolution provides that, for the purpose of the ten-unit threshold, residential units acquired by a “connected person” shall be taken into account. The definition of connected person for this purpose is wide and this provision is likely to require detailed analysis for complex groups and private equity structures.

There is an exclusion from the requirement to take an acquisition by a connected person into account where:

1. either the person acquiring the residential unit(s) or the connected person is an individual;
2. the person and the connected person are not acting in concert in relation to the acquisition of those units, and
3. the acquisition of any of those units is not part of an arrangement, one of the main purposes of which is to avoid the unit being taken into account for the purpose of the 10% stamp duty rate.

The 10% rate will apply to the purchase of ten or more units anywhere in the State, and not just the purchase of ten or more residential units in any one scheme.

As expected, the 10% rate will not apply to apartments and apartments will not be taken into account for the purpose of the ten-unit threshold. The financial resolution provides that apartments for this purpose are residential units in:

“a multi-storey residential property that comprises, or will comprise, not less than three apartments with grouped or common access”.

The requirement for grouped or common access is likely to mean that duplexes in “own door” developments will be subject to the higher rate.

There is a three month transition period for contracts already exchanged but not completed prior to the commencement of the financial resolution.

This applies where:

1. a binding contract is entered into before 20 May 2021; and
2. the instrument effecting the acquisition is executed before 20 August 2021 and is accompanied by a certificate that the instrument was executed solely in pursuance of a binding contract entered into before 20 May 2021.

In the context of forward sale agreements, which typically complete when building works are complete, this period may not be sufficient to allow all purchasers to avail of the transitional arrangements.

The financial resolution includes provisions to ensure that indirect multiple purchases through the acquisition of shares, units of investment funds or partnership interests will also be subject to the new 10% rate. These provisions, as drafted, appear to have wider application but it is not yet clear whether this is intended.

Please contact a member of the Arthur Cox Tax team or your usual Arthur Cox contact for more information.