Stamp duty is one of the most annoying taxes ever dreamed up. It is paid in return for a document simply being stamped. The document relates to the legal conveyance of a property from one party to another. Without it (and its stamp), the deal cannot be done.

This pivotal significance means that, rather than complaining about the size of stamp duty payments, it generally makes sense for buyers to simply pay out and forget, at least until the next time. That is if you're planning another move; it is perfectly plausible that the pain of one stamp duty outlay could put you off buying again for life.

Take the payment that would be due on a typical first-time buyer purchase in Dublin. A second-hand property changing hands at €280,000 would carry a stamp duty levy of 3.75 per cent, or €10,500.

Five years later, that same first-time buyer decides to become a second-time buyer and begins to look at properties in the €500,000 range. This purchase will attract a stamp duty levy at 7.5 per cent, with the higher rate applied both because of the buyer no longer being a first-timer and because of the higher property value.

Once this deal has been completed, the buyer will have paid a total of €48,000 within a five-year period. Ouch! And so it will continue if the €500,000 property becomes too small when kids arrive in another few years.

Conventional wisdom over the past few years has suggested that repeated house moves have become less frequent because of this stamp duty issue. Homeowners have plumped instead for extensions to existing properties when space becomes an issue.

While this option may carry considerable hassle on a practical level (where do you cook while the kitchen is sitting in the middle of the garden?), it will save on the all-important stamp duty. The funding for the extension will meanwhile be drawn from the equity that has been building up in the property since it was bought. Some lenders specialise in this type of remortgaging (or equity release) business, with IIB, for example, extending €1 billion to such homeowners last year. This sum accounted for about half of the bank's total new lending in 2003.

Other lenders sing a different tune however, with research published by Bank of Ireland earlier this week pointing to an upsurge in trading-up activity. The bank lent more than €350 million to trading-up buyers in the first six months of this year, an increase of 50 per cent on the same period of 2003. Bank of Ireland says growth is now stronger in trading-up loans than in equity release. The amount lent by the bank through this latter vehicle rose by 35 per cent to €200 million over the first six months of 2004.

Ms Olive Moran of Bank of Ireland Mortgages says there is no mystery in the growth, with buyers simply tapping into their equity as they outgrow their current abode. Stamp duty, as Ms Moran points out, cannot be avoided if there is no physical room to extend.

The average trading-up loan in Dublin in the first half of the year stood at €280,000, up from €240,000 in 2003. Outside the capital, the average was €180,000, up from €150,000. The average equity release meanwhile was €59,000 outside Dublin (up 16 per cent) and €72,000 in Dublin.