Finance Bill 2019 property related tax measures

Oct 21, 2019

As expected, the measures announced on Budget day are provided for in Finance Bill 2019.  These measures include an increase in the commercial rate of stamp duty to 7.5 percent which took effect on Budget night; transitional measures are provided for in the Bill.   The Help to Buy scheme and the living city centre initiative are extended for a further two years.  Anti-avoidance measures to the REIT and IREF schemes are introduced. 

Stamp Duty Non-Residential Property

Section 56 of the Bill confirms the Budget day increase in the rate of stamp duty on non-residential property from 6 percent to 7.5 percent with effect from midnight on 8 October. Transitional measures apply to binding contracts entered into before 9 October provided, they are executed before 1 January 2020. Provisions are included covering the stamp duty refund scheme to ensure that stamp duty of 2% will apply where land is subsequently used for residential development.

Help to Buy

The Help to Buy (HTB) scheme has been extended, unchanged, for a further 2 years to the end of 2021. The HTP scheme provides a refund of income taxes and DIRT of up to 5% of the cost of a new house, subject to a maximum refund of €20,000 and a maximum house price of €500,000.

Living City Initiative

The Living City Initiative, which is a scheme of property tax incentives which applies to certain special regeneration areas has been extended until the end of 2022. The scheme provides for tax relief for qualifying expenditure incurred on both residential and certain commercial refurbishment and conversion work.

Anti-avoidance

Real Estate Investment Trusts (REITs)

A number of changes to the REIT regime were were brought into effect on Budget night by way of Financial Resolution. Section 28 of the Bill inserts a new requirement, not included in the Financial Resolution, that any expense deducted when calculating the REIT profits available for distribution must be incurred wholly and exclusively for the purposes of the REIT business and any excessive amounts are charged to tax in the hands of the REIT.

Read a reminder of the Budget day amendments.

Irish Real Estate Funds (IREFs)

A number of anti-avoidance amendments to IREF’s were announced on Budget day and were introduced by way of financial resolution on Budget night. The following additional provisions have also been inserted in the Finance Bill:

  • Any gains which are reflected in the market value of the IREF units, but which are not reflected in the accounts of the IREF, are subject to withholding tax. 
  • The introduction of a charge to tax at the fund level in certain holder of excessive right situations and places the requirement to file an IREF return on an annual footing.
  • The Bill also makes an amendment to provide for a penalty for non-compliance with the IREF return requirements.

Read a reminder of the Budget day amendments.