Consideration

Transfers of property


When you buy property, the consideration is the amount of money you pay for it, excluding any Value-Added Tax (VAT).

However, the consideration may not always be entirely money. You may take responsibility for repaying a debt owed by the seller or transferor of the property (usually called assumption of a debt). You may have a property transferred to you to pay off a debt owed to you (usually called satisfaction of a debt). You may transfer shares to the seller.

You pay Stamp Duty on the value of the debt or the shares.

Assumption of a debt

When you take responsibility for repaying a debt, Stamp Duty is chargeable on the higher of:

  • the amount of the debt assumed (including a mortgage) plus any other consideration paid
  • or
  • the equity of redemption. The equity of redemption is the difference between the market value of the property and the debt assumed. In other words, the equity of redemption is the net value of the property.

NOTE

If the property is in negative equity Revenue accept Stamp Duty paid on the market value of the property. This applies whether the mortgage relates to residential or non-residential property. Negative equity means that the current value of your property is less than the amount outstanding on your mortgage. In other words, you owe the bank more money than what you would get for the sale of your property.

Satisfaction of a debt

In the case of the satisfaction of a debt, Stamp Duty is chargeable on the higher of:

  • the amount of the debt plus any other consideration paid
  • or
  • market value.

Transfer of Shares

You pay Stamp Duty on the value of the shares transferred.

Distributions in specie

You may be a shareholder in a company. The company may own assets, for example, office buildings, residential properties, plant and machinery.

If the company goes into liquidation or is wound-up those assets are held for the benefit of the creditors of the company.

Once the creditors are paid, any remaining assets become the property of the shareholders. Those assets may be sold, and the cash given to the shareholder.

Alternatively, the assets could be transferred to the shareholders in the proportion of their shareholding.

The transfer of assets, rather than cash, is called a ‘distribution in specie’. Stamp Duty is not chargeable on an instrument that transfers assets in this way. You do not file a Stamp Duty return.

However, Stamp Duty is chargeable if:

  • the assets are the subject of a charge (mortgage) and they are transferred subject to that charge
  • the company owes a debt to a third party and the shareholders agree to assume liability for the debt
  • the company owes a debt to the shareholders and the shareholders agree to forgive the debt.

Next: VAT-exclusive consideration