In keeping with the Government's Strategy 2020: A Strategy for a Renewed Construction Sector, Budget 2015 introduced a number of positive changes which should assist the Property and Construction sectors. The forthcoming Planning Bill will include further initiatives, particularly to encourage social housing.
CGT Relief Window Closing!
The relief was introduced in 2011 to allow purchasers avail of a seven year exemption from capital gains tax. Any purchaser wishing to avail of this relief must enter into a binding unconditional Contract for Sale on or before 31 December 2014. The initiative in 2011 was to encourage activity in the market. As the number and value of property transactions have increased dramatically since then, the time is right to close the window.
80% Windfall Tax Abolished
The 80% windfall tax applying to profits on the disposal or development of rezoned land will be abolished with effect from 1 January 2015. The standard rate of tax on capital gains of 33% will apply instead.
Current legislation provides that all changes in land zoning will result in this land being liable for an 80% windfall tax rate when sold. Commentators have stated that this super tax has contributed to the lack of development of new housing. The abolition of this tax is expected to kick start the construction industry in rural and urban areas and assist in solving the shortage of homes on the market at present.
First Time Buyers
Immediately effective is the introduction of a Deposit Interest Retention Tax refund on savings used to purchase a home by first time buyers. The relief will run until the end of December 2017 in respect of savings up to a maximum of 20% of the purchase price.
This means that first time buyers will be permitted to retain 100% of interest they earn on their savings. Banks will introduce saving packages to encourage prospective first time buyers to save.
There will be a public consultation and if landowners are holding onto zoned or serviced development lands for higher prices the Minister for Finance will examine what taxation measures may be taken to penalise such landowners.
Mr Noonan's colleague, Alan Kelly, the Minister for the Environment, Community and Local Government, has already announced some reforms to the planning system to be introduced through the Planning Bill. The new legislation is expected to introduce a new levy to be charged to landowners with vacant sites or empty buildings. It is expected...