Stamp Duty

The increase in the rate of duty to apply on the transfer/conveyance of non-residential property (to include assets such as commercial property, agricultural land and goodwill of a business) from 6% to 7.5% is effective since Budget night, having been passed by Financial Resolution. The Finance Bill also makes amendments to ensure that the potential refund available where land is used for residential development remains the same by ensuring the overall rate in such cases remains at 2%. Transitional measures are in place to allow the 6% rate to continue to apply where a binding contract was in place prior to 9 October 2019 provided the related transaction is executed prior to 1 January 2020.

Changes to the Real Estate Investment Trust ("REIT") Regime

The Finance Bill legislates for a number of amendments to the REIT regime as follows:

  1. Only expenses incurred wholly and exclusively for the purposes of the REIT business are deductible when calculating REIT profits available for distribution – any excessive amounts are taxable in the REIT. 
  2. Distributions of the proceeds of property disposals are subject to dividend withholding tax – 25% rate with effect form 1 January 2020. 
  3. A REIT who does not either reinvest the proceeds of a property disposal within the REIT or distribute within a 24 month period must include such amounts within its property income, 85% of which must be distributed annually and 
  4. On cessation of being a REIT or group REIT a deemed disposal and re-acquisition of REIT assets will only occur where the REIT or group REIT has been in existence for at least 15 years.

Measures 2 to 4 above took effect form Budget night by Financial Resolution.

Changes to Irish Real Estate Funds ("IREF") Rules

Finance Act 2016 introduced a 20% withholding tax applicable to return on investments made by certain investors in Irish regulated funds which hold Irish real estate investments (IREFs). Finance Bill 2019 includes a number of anti-avoidance measures in respect of IREFs, designed to counteract perceived aggressive tax planning by some IREFs.

The amendments are as follows:

  1. Changes to the calculation of the amount on which IREF tax is levied to ensure that any gains which are reflected in the market value of the unit but which are not reflected in the accounts of the IREF are subject to IREF tax.
  2. Restrictions on deductions that can be made by an IREF in arriving at the surplus available for distribution – an interest restriction and a general restriction.
  3. A charge to tax at the fund level in certain holder of excessive right situations and;
  4. Other minor technical amendments.

Help To Buy Scheme

Section 477C TCA 1997 provides income tax relief to assist first time buyers with obtaining the deposit required to purchase or build their first home. The scheme was due to expire at the end of 2019, however, is has been extended in its current format for a further two years, to 31st December 2021.

Living City Initiative

Living City Initiative is a property incentive scheme and has been extended until 31st December 2022. Qualifying expenditure incurred under the scheme may qualify for tax relief under the scheme.

Return to Budget 2020 Analysis.