The Revenue Commissioners reclaimed some €3.2 million in stamp duty relief given to first-time buyers in an eight-month period this year because they failed to comply with the conditions under which it was granted.
Labour Party finance spokeswoman Joan Burton received the information from Minister for Finance Brian Cowen in response to a parliamentary question.
Joan Burton
Ms Bruton said that between April and November this year there were 392 cases where stamp duty relief, which had been granted largely in respect of first-time buyers and amounted to €3.2 million, was clawed back.
"I am surprised at the very large number of cases in an eight-month period of clawbacks of over three million in stamp duty for failure to comply with the conditions for stamp duty relief for first-time buyers.
"It appears that the principal reason for the clawback is first-time buyers entitled to stamp duty relief letting their property in whole or in part for more than €6,000 per annum within the first five years of their ownership."
Ms Burton said Revenue should issue clear advice to first-time buyers about the conditions under which the stamp duty exemption is granted.
"There is a particular confusion in respect of the rent-a-room scheme. First-time buyers and others are allowed to rent a room in a house for rent of up to €6,000 a year. That is then tax free and has no implications for stamp duty exemptions and reliefs. However if you go over the €6,000 even by one, then the whole of the relief is lost."
Ms Bruton said this could be "particularly harsh" for young people who are meeting their mortgage commitments through renting part of a property but had failed to familiarise themselves with stamp duty clawback conditions.
"Questions, in my view, arise for both solicitors and banks dealing with mortgages to clearly advise first time buyers of the conditions under which the stamp duty exemption is granted," she said.
"This is a clear case where information needs to be provided as a matter of urgency to buyers."
The Labour Party TD noted that in his pre-Budget economic outlook, Minister for Finance Brian Cowen indicated that some €70 million will be paid in stamp duty in 2006 by approximately 2,000 first-time buyers, mainly purchasing second-hand homes.
"The figures supplied to me indicate that 500-600 first time buyers could be exposed to having their stamp duty relief clawed back and having to repay a hefty amount of tax to the Revenue Commissioners."