Divorcees spending substantial sums on new homes could benefit from Fianna Fáil plans to abolish stamp duty for first-time buyers.
The Department of Finance is currently drafting legislation to give effect to Fianna Fáil commitments to lift the current cap on stamp-duty relief on second-hand homes for first-time buyers, which applies only for houses costing €317,000 or less. It will mean that first-time buyers will face no stamp-duty liability on any new or second-hand homes they purchase.
The party has said that the proposed change is designed to help hard-pressed younger people get onto the property ladder, and provide them with an advantage over investors and other purchasers. Wider stamp duty reform was ruled out as benefiting only a small number of individuals.
However, it has now emerged that under current tax law people getting divorced or entering into legal separations are also entitled to be treated as first-time buyers and consequently to avail of tax reliefs.
A spokesman for the Revenue Commissioners said that such buyers were entitled to claim the current stamp-duty relief for first-time buyers, but subject to meeting certain criteria.
The spokesman stressed that the relief applied to the current situation, and that the Revenue Commissioners were not planning any potential changes to stamp-duty legislation.
A spokesman for the Department of Finance confirmed again that the department was drawing up proposals in relation to stamp-duty reform, but was unable to say whether first-time buyer relief would still apply to divorcees following the reform.
Fianna Fáil has promised to introduce and pass the new legislation as a priority if returned to power following the return of the Dáil on Thursday. It is envisaged that the stamp-duty reforms, which will be backdated to April, will be passed by the time the Dáil rises for its summer holidays in early July.
The Revenue Commissioners' website advises that first-time buyers' stamp-duty relief also applies to a person who is subject to a separation or divorce, if the person has "left that home, not retained an interest in that home, and . . . is not beneficially entitled to an interest in a house other than the marital home".
The other spouse must be in occupation of the original family home.
The relief for divorcees, first highlighted yesterday in the Sunday Independent, is of limited value to divorcees at present because of the cap of €317,000.
However, should the cap be lifted, it could provide a valuable tax saving for wealthier individuals who become divorced or legally separated.
Any second-hand home which is bought for more than €635,000 attracts a stamp duty rate of 9 per cent.
The divorcee property market has become an increasingly lucrative one with 4,500 divorces and judicial separations having been granted in 2005 alone.