Thousands of property owners could face fines or other penalties as a result of a Revenue clampdown on abuse of stamp duty relief. The Revenue exercise is targeting individuals availing of owner-occupier stamp duty relief who rent out their properties within five years of purchase.
The relief claimed is supposed to be paid back in such circumstances.
The Revenue is currently conducting a pilot project in the Dublin area involving a random sample of 1,000 transactions from 2003 where purchasers availed of full "owner- occupier" relief on new properties with a certified floor area of less than 125sq m.
This is due to be completed in March, when it could be extended to cover other areas of stamp duty relief, including a more specific focus on first-time buyer relief.
The pilot project is understood to have already indicated a significant level of non-entitlement, with one conservative estimate placing this at "more than 10 per cent".
According to Revenue figures, there have been more than 65,000 claims for owner-occupier exemption between 2000 and 2004, by both first-time buyers and previous property purchasers.
If the decision is taken to extend the investigation, thousands of individuals could face significant fines and other penalties. Another option is prosecution in the courts.
The Revenue has acted in response to concerns that individuals may be wrongly applying for the owner-occupier relief when purchasing a property. Instead of living there for the required five years from the date of execution of the deed on the property, they are renting it out without paying back the relief plus interest due - known as "claw-back" - as required by law.
Owner-occupiers are, however, allowed to rent out a room under the "rent a room" scheme.
"The individuals involved [in the pilot study] have been contacted by Revenue and requested to furnish specific information," a Revenue spokesman said. "In some cases a visit by Revenue staff to the property was necessary. A number of cases are now the subject of a tax audit by Revenue."
The Revenue is anxious to encourage members of the public to contact it directly with any concerns they might have about owner-occupier relief they have been granted. By doing so they can also significantly mitigate the penalties which they may face.
However, at a minimum they will have to pay back the relief owed plus interest.
It is understood that a particular focus of the Revenue investigation will be on investors who may have used the relief as a springboard to put together a portfolio of properties - rather than as a means of owning and occupying their own home.
When the results of the completed pilot project have been analysed, the Revenue will decide whether to examine the wider field of owner-occupier exemption claims since 2000, the spokesman said.
Typical levels of stamp duty relief for owner-occupiers vary. Stamp duty, which is calculated as a percentage of the cost of purchasing the property, can be as high as 9 per cent of the price.