Investors buying property outside the State will be subject to the same restrictions on claiming interest relief as domestic property investors, according to measures outlined in the Finance Bill published yesterday.
The Bill, which implements the taxation measures announced by the Government as a response to the Bacon study on house prices, states that restriction on investment in foreign properties applies from yesterday. It means investors will no longer be able to claim tax relief by setting interest payments off against their rental income on purchases of properties in Britain as well as in the Republic. Publishing the Bill, the Minister for Finance, Mr McCreevy, said the Government package was a balanced approach, designed to increase the supply of serviced land, reduce excess investor demand and assist ordinary house purchasers.
It implements the cuts in stamp duty for owner occupiers. The new rates range from zero for houses up to £60,000 to 9 per cent for those above £500,000. The imposition of stamp duty on new homes being purchased by investors is also confirmed.
In relation to the restrictions on the claiming of interest income and the payment of stamp duty by investors buying new houses, the period for pipeline cases to be completed has been extended to the end of the year, from the end of September. To qualify to claim interest income relief and avoid stamp duty on a new home, investors will have to have all conveyancing work completed by December 31st this year.
The Bill also confirms that the restrictions will also apply to anyone converting their main residence into rented accommodation after April 23rd, irrespective of when the money was borrowed. A spokesman for the Irish Homebuilders' Federation said the extension was still not long enough for the completion of some larger projects in Dublin and Galway and they will be making further representations to the Minister to have it extended again.
The disallowance of interest will not apply to properties covered by the Designated Seaside Resorts Scheme or the new rural renewal scheme, or to holiday cottages or apartments in other parts of the country which are registered or listed with Bord Failte.
Mr McCreevy said the Bill would be brought before the Dail and Senate next week.
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