Hundreds of first-time buyers who bought second-hand properties since December could face a clawback on stamp duty from the Revenue.
Solicitors signed off on the purchases, assuming their clients had no liability to stamp duty as first-time buyers, despite the fact that parents were named on mortgage applications.
The Revenue has now issued a clarification to solicitors, reminding them that first-time buyers whose parents are mentioned on loan documents do not qualify for stamp duty relief.
It has also confirmed that it is entitled to pursue cases where the relief was incorrectly granted. On the basis of the €228,000 average price paid by house buyers, that could leave cash-strapped homeowners facing a bill of more than €9,000, and it could be as high as €15,850.
"No decision has been made on re-examining what, in any case, are likely to be a relatively small number of cases," said a Revenue spokesman. However, he added that "if we were to undertake an operation like that, we would look sympathetically on any case where there was a misinterpretation of the regulations".
The Revenue's interpretation of the rules regarding first-time buyers and stamp duty relief has put it on a collision course with lenders and the legal profession.
Most banks are understood to have sought independent legal advice on the Revenue stance, which states that any person "who is party to any borrowings relating to a purchase is also regarded as a buyer of the house and [stamp duty] relief will not be available".
Minister for Communications Noel Dempsey said yesterday in the Dáil that there were concerns that some people who were not first-time buyers were trying to abuse the benefit, and the whole issue was being examined by Revenue.
Speaking at the launch of the Government's new housing initiative yesterday Minister for the Environment Dick Roche hinted that a way may be found for first time buyers to avoid paying the duty.
"It's not beyond the wit of human ingenuity to come up with an alternative set of words to achieve the objective the Government had and that was to give genuine first-time buyers a break on stamp duty," he said.
"I fully appreciate the difficulty it has caused and so does the Minister for Finance but I think changes will be made, yes," he said.
Around 10,000 first-time buyers have availed of the extension of relief announced in the last Budget allowing them to buy second-hand homes up to the value of €317,500 without paying stamp duty. Up to 10 per cent of these have not had sufficient earnings to qualify for the scale of loan required. Several bank officials said they have been pursuing co-lending as a policy in such cases on the understanding that there was no tax liability.
Mortgage brokers said yesterday the Revenue's position would force more people to remortgage their homes in order to free up capital to give to their children as gifts instead of signing loan agreements. The Revenue has confirmed that such gifts do not remove eligibility to stamp duty relief.
