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Deloitte Real Estate Tax take on the recent publication of the Tax Strategy Group Papers

12 August 2022

Publication of Tax Strategy Group Papers

On the 10th of August 2022, the Department of Finance published the Tax Strategy Group (TSG) papers which outline various options for tax policy changes in Ireland which are prepared around this time of the year annually for consideration by the Irish Government in the 2023 Budgetary process.

Overview of Real Estate Tax related TSG papers

In the context of Real Estate Tax issues, the Property TSG paper considers the Living City Initiative, Local Property Tax, collecting information on vacant properties and the Residential Zoned Land Tax. The Capital & Savings Taxes and Stamp Duty TSG paper also considers real estate tax related matters especially in the context of stamp duty on residential and non-residential property. Some of the highlights in the TSG papers from a real estate tax perspective are presented below.

Living City Initiative

The Living City Initiative relates to tax relief for qualifying expenditure in the refurbishment and conversion of qualifying residential and commercial buildings located within Special Regeneration Areas in Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. It is a targeted incentive to encourage people back to the historically and culturally important central areas of the selected Irish cities mentioned. Due to the relatively lower than anticipated take-up of the scheme and its continued relevance in light of current Government housing policy, various enhancements are considered in the Property TSG paper including shortening the term of the relief; allowing carry-forward of the relief, expanding it nationwide, applying it to non-essential extensions, expanding building eligibility, etc.

Vacant Property Tax

Based on the Property TSG paper overall vacancy levels are low in Ireland and are in line with a functioning housing market but a Vacant Property Tax is being considered nonetheless and on the assumption that it would apply nationwide and not be limited to specific urban areas or regions. The yield from such a tax would be modest and its objective would be to increase the supply of housing for rent or purchase to complement the Government’s “Housing for all” strategy.

Stamp Duty – Residential development refund scheme

Legislation provides for a refund of a portion of the stamp duty paid on the acquisition of non-residential land where that land is subsequently developed for residential purposes. In the absence of the relief stamp duty would normally be 7.5% of the value or purchase price of the property, whichever is the higher. It applies to one-off housing as well as to multi-unit developments and can result in the net stamp duty rate paid on such land being reduced to 1 - 2%. The scheme is to apply to operations commenced by 31 December 2022, and for the time allowed between commencement and completion of the qualifying project of 2.5 years. The TSG paper notes that as the scheme is due to close for new applications on 31 December 2022, the Department of Finance is examining its possible extension or any appropriate amendments to the scheme in advance of Budget 2023.

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