After the handsome returns that have been generated from the Irish commercial property market in the recent past, the transactional activity in the Irish property market continues to be slow: the number of commercial property deals are a fraction from the peak. The main cause has been the difficulty of potential buyers in securing debt financing. Investors have and continue to experience extremely challenging times.
From a tax viewpoint, the recent reduction in stamp duty from 6% to 2% on commercial property and the introduction of the Capital Gains Tax incentive, which will apply to property bought by the end of 2013 and kept for more than seven years, will somewhat contribute to stimulate the Irish Property Market. Further reductions in interest rates combined with increased stability in the debt markets and availability of credit will hopefully influence activity in this sector. However, it will still be a difficult market.
Investors are seeking to limit exposures by focusing on disposals, reorganising their structures to minimise costs, generate cash and potentially boost balance sheets where possible to show strength where needed.
All such transactions will have a stamp duty and Value Added Tax consequence and potentially capital gains tax will need to be addressed. We can help our clients minimise the tax impact of their strategies for maximising value from property portfolios and help them put in place strategies to reorganise their portfolio and to dispose of property tax efficiently, raise finance and reduce property costs.
For further information please contact:
Padraic Whelan, Partner
T+353 1 417 2848