|Investment Tax Changes
The following are the key changes for investors:
· The holding period to qualify for the exemption from Capital Gains Tax (CGT) for qualifying land and buildings (i.e. those purchased between 7th December 2011 and 31st December 2014) will be reduced from seven years to four years. The full exemption on capital gains will now apply to those assets disposed of in years four to seven.
· Stamp duty on commercial property transactions is set to increase from 2% to 6% from 11th October 2017.
· A stamp duty refund scheme is to be introduced for land bought and used to develop housing within 30 months of purchase.
· A more than doubling of the vacant site levy, increasing from 3% to 7% in the second and subsequent years of holding.
· A new deduction is to be introduced for pre-letting expenses up to €5,000 for a property which has been vacant for a period of 12 months or more. A clawback period of four years will apply if the property is withdrawn from the rental market within this period.
LHW VIEW: The increase in commercial property stamp duty has had an immediate impact on clients considering certain investment opportunities. This measure has the potential to impact on our clients invested in commercial property funds run by life companies and REITs.
It is disappointing there were no reductions in CGT rates or fund exit tax in line with the reduction in Deposit Interest Retention Tax (DIRT) from 39% to 37% as outlined in Finance Act 2016.