New stamp duty rates on house purchases announced this week will apply to all property transfer deeds stamped on or after June 15th. But people who had signed contracts to buy second or holiday homes before June 15th will be able to avoid paying the new 9 per cent stamp duty rate under transitional arrangements which will apply until January 31st 2001.

They will be able to pay at the old rates during this period as long as they complete the conveyancing or title transfer documents before January 31st, 2001.

The arrangements apply to house purchases where contracts were signed before June 15th. The 9 per cent stamp duty rate applies to all purchases by investors of new and second-hand residential property.

Stamp duty is not charged on new houses under 125 sq m (1,346 sq ft).

For example a purchaser who signed a contract to buy a secondhand holiday house for £140,000 (€177,890) before June 15th and will complete the transfer deed by January 31st, 2001 will pay stamp duty of £5,600 - a rate of 4 per cent. This would compare with stamp duty of £12,600 due under the new rules, a saving of £7,000. But this house owner will be liable for the annual 2 per cent anti-speculative tax on the value of the house - £2,800 - unless he qualifies for exemption. Houses exempted from this tax include rented residential properties under the tax-incentive based Seaside Resorts Scheme and residential property qualifying for Section 23 reliefs or relief under the Town, Rural and Urban Renewal Schemes. Houses available for longterm renting where the landlord complies with standards and conditions set by the Department of the Environment will also be exempt from the 2 per cent annual tax.

Next week the Minister for Finance, Mr McCreevy, will publish a Finance Bill which will include the stamp duty changes and the new anti-speculative annual 2 per cent tax on residential properties which are not the principal private residence of the owner.

The new stamp duty and anti-speculative taxes will not apply to holiday homes abroad bought by Irish residents, the Revenue Commissioners said yesterday. Stamp duty is a tax on the documents used in the transfer of property. The duty is due when the title passes to the new owner - the conveyancing stage. This can often happen some time after the contract to buy the house is signed.

Buyers of residential property must pay the duty on all property bought subject to some exemptions - for example there is no duty on transfers between spouses or on new houses of less than 125 sq m.

If the stamp duty is not paid, the new ownership of the house cannot be registered at the Land Registry or the Register of Deeds because the document transferring title will not be stamped. This would make it almost impossible to sell the house later on.

Meanwhile, the Minister for Social, Community and Family Affairs, Mr Ahern, confirmed that the Government had agreed to increase the exemption limit to £150,000 from £75,000 for people aged 66 and over who were receiving non-contributory social welfare pensions and who sell their home and either buy or rent alternative accommodation or move into a private nursing home.