Focus on real-estate investment trusts
Sir, – I note that a report from a pre-budget meeting of the Department of Tax’s strategy group raised the possibility of imposing a capital gain tax of 33 per cent on the disposal of a family home.
This seems to be a red herring as it has distracted attention from the final paragraph which stated that officials warn that tinkering in the other areas such as “special incentives to help the property market recover between 2011 and 2014 – would be counterproductive or logistically complex”.
One of the key “tax” property initiatives was the introduction of REITs – real-estate investment trusts – in the Finance Act 2013, section 705G of which states, “a company which is a REIT or a member of a group REIT shall not be chargeable to tax in respect of (a) income of its property rental business or (b) chargeable gains accruing on the disposal of assets of the property rental business”.
The only obligation to avoid capital gains is not to sell the property inside three years. It is not at all surprising that we have seen an increase in rents and a rise in the sale prices of apartments.
Meanwhile, “ordinary” property owners pay tax on the rental income and 33 per cent capital gains on its disposal. If this tax policy works so well for REITs, why is it not extended to others?
Instead of compulsory purchase, maybe the State should abolish capital gains via emergency legislation in the next budget to get over the housing crisis, thereby giving a “carrot” to property owners to sell vacant or derelict homes? – Yours, etc,
EVELYN MAHON, FTCD
School of Social Work
and Social Policy,
Trinity College Dublin,