Will higher commercial stamp duty cost me when building a home?

I am hoping to buy a site and build a house in 2020. With commercial stamp duty increasing from 6 per cent to 7.5 per cent, will the Residential Development Stamp Duty Refund Scheme also increase from 4 per cent to 5.5 per cent?

Will the net payable in stamp duty by the homeowner post-refund still be 2 per cent?

Mr KB, Dublin

There was no specific mention of the Residential Development Stamp Duty Refund Scheme in the budget.

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Under the scheme, two-thirds of the stamp duty paid when acquiring a site is repayable when you start building on it. With the stamp duty levied at 6 per cent up to the budget, that meant you got an amount equal to 4 per cent of the purchase price of the site back when you started building.

Assuming that two-thirds rule remains the same, you will now pay 7.5 per cent in stamp duty when you purchase the site and will receive 5 per cent of that back – leaving you with a stamp duty bill of 2.5 per cent of the value of the land.

If that is to change, it will likely feature in the Finance Bill, which will be published later this week. The Bill is the piece of legislation that gives legal force to measures outlined in the budget and related items, like this scheme.

There are a number of rules for those availing of the refund scheme.

First up, for someone like you, building a single home, the maximum site for which you can claim a refund is one acre.

You must also start building on the site within the 2½ years after the land was transferred into your ownership, or before end-December 2021. At this point, that deadline is within the 30-month window. It may yet be extended but you would need to keep in touch with your local authority or Revenue about that.

It is possible to do your project in stages, in which case you will only need to start work on the first phase within the deadlines above. When they talk about building work, activities like site clearance, drainage or the laying of foundations do count.

Finishing work

You also have a deadline for finishing the building work – two years from the time you started. If you are working in phases, the two-year limit applies from the time each phase was started.

Normally, when the project is done, you will file a certificate of compliance on completion with your local authority, but in the case of a single unit, like yours, you can opt instead to consider the work complete when you get an electrical completion certificate, which confirms that the property is connected to the electricity grid.

There is also another test imposed on people availing of the residential stamp duty refund scheme. It is called the 75 per cent test.

From your point of view, the important thing is that you can ignore it as it does not apply to people building a single property.

However, for others, it lays down that either the footprint of the buildings occupies at least 75 per cent of the site, or that the gross floor space of the dwelling units must equal or exceed 75 per cent of the total surface area of the site.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.