Cowen says stamp duty changes will 'boost confidence'

Stamp duty:Minster for Finance Brian Cowen said today his changes to the stamp duty regime would boost confidence and support employment.

Under the new rules, stamp duty will now not apply on the first €125,000 of the cost of a residential property.

A rate of 7 per cent will apply between €125,000 and €1 million, while 9 per cent will be levied on the portion of the price in excess of €1 million.

The current exemption for first-time buyers will be retained.

However, the rule requiring those benefiting from this exemption to live in the house for at least five years will be changed. Under the new rules, this will be adjusted to two years.

Mr Cowen insisted the new rules would simplify the system and prove less expensive for both buyers and sellers

"This regime will provide for a highly progressive stamp duty system whereby those buying the more expensive houses will always pay a higher effective rate than those buying your average house," he said.

The move comes in the wake of the latest Exchequer figures that show stamp duty receipts virtually collapsed during November as the national tax take for the month fell far below official projections.

The Exchequer had expected to collect €367 million in stamp duties during the month but reflecting the continuing slide in housebuilding activity, actual stamp duty receipts amounted to just €209 million, €158 million or 43 per cent below target.

The Irish Auctioneers and Valuers Institute (IAVI) welcomed moves to simply the regime but insisted rates in Ireland remained among the highest internationally.

Chambers Ireland chief executive John Dunne said the reform of the stamp duty regime was "reasonable and timely".

"However we fear that an opportunity has been missed to locate this in the context of wider reform of property taxation," he said.

In the Budget, Mr Cowen also raised the ceiling on mortgage interest relief for first-time buyers by €2,000 for a single person and €4,000 for a married couple or widowed person to €10,000 and €20,000 respectively.

The Minister also said that €1.7 billion in Exchequer resources had been set aside for social and affordable housing.

This would be added to €800 million in non-Exchequer funds to support the provision of 9,000 new social housing units that will be built or acquired in 2008 and 5,500 new affordable homes.