Tax Reliefs Data

Thursday, 10 December 2015

Questions (69)

Lucinda Creighton

Question:

69. Deputy Lucinda Creighton asked the Minister for Finance the tax reliefs relating to property, the number of persons availing of each relief and the total cost to the Exchequer of each relief in the most recent tax year. [44467/15]

View answer

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that within the tax code there are a significant range of tax reliefs associated with property. All reliefs, including property related reliefs, are a cost to the Exchequer. I propose to provide an analysis of the property reliefs under each Tax and Duty heading. Unless otherwise stated the figures relate to the year 2013.

Income Tax/Corporation Tax Reliefs

The following table is a list of the property based incentive schemes qualifying for capital allowances. It should be noted some of these figures are provisional. While the majority of these schemes have been terminated (capital allowances have been retained for expenditure on hotels, holiday camps, holiday hostels, guest house and registered caravan and camping sites at a rate of 4% per annum over 25 years), tax relief may continue to be claimed on expenditure incurred prior to the termination date in question.

Scheme	Number of Claimants	Tax Cost - €m
Urban Renewal	2,664	46.0
Town Renewal	749	10.9
Seaside Resort	286	2.3
Rural Renewal	2,198	18.5
Multi-storey car parks	57	3.0
Living Over the Shop	41	0.6
Student Accommodation	537	11.9
Enterprise Areas	105	1.9
Park and Ride	17	0.7
Hotels	1,017	35.5
Holiday Cottages	574	11.0
Holiday Hostels	*	*
Guest Houses	*	*
Nursing Homes	418	10.9
Housing for the Elderly/Infirm	100	1.4
Convalescent Homes	12	0.5
Qualifying Hospitals	357	9.2
Qualifying Mental Health Centres	*	*
Qualifying Sports Injury Clinics	82	1.4
Buildings used for certain Childcare Purposes	304	4.4
Buildings or structures in registered Caravan camp; Camping sites	*	*
Mid-Shannon Corridor Tourism Infrastructure Investment Scheme	*	*

* indicates that the number of claimants is low (usually less than 10) and cannot be provided to protect taxpayer confidentiality.

As statistics were not captured separately for Third Level Educational Buildings and the Countrywide Refurbishment Scheme (both now terminated) these have not been included. Also not included are the ordinary industrial buildings (e.g., mill/factory and airport runways/buildings) as statistics are not captured separately for these either.

The Living City Initiative and incentives for certain Aviation Services Facilities were commenced in 2015. The earliest point at which statistics for the number of persons availing of these reliefs and the total cost to the Exchequer may become available is when tax returns for 2015 have been filed.

Home Renovation Incentive (HRI)

This scheme provides a tax relief by way of an income tax credit on repair, renovation or improvement works on principal private residences or rental property carried out by tax compliant contractors. In addition to providing an income tax relief, the HRI also aims to support tax compliance in the building industry by moving activity out of the shadow economy into the legitimate economy.

The year 2014 was the first full year in which the incentive operated. The incentive came into operation on 25 October 2013 and will run until 31 December 2016. Rental properties were brought within the scheme from 15 October 2014.

Since the introduction of the incentive, works on 31,719 properties have been notified to Revenue's HRI online system (as of 30 November 2015). This represents more than €695 million worth of works involving some 6,705 contractors. The potential total cost to the Exchequer in respect of these properties is approximately €47m. As a claim for the HRI credit can only be made in the year after works have been paid for, there was no cost to the Exchequer in 2014 (works paid for in the period from 25 October 2013 to 31 December 2013 were deemed to have been paid for in 2014).

Additional Income Tax Reliefs

Other property based reliefs include interest relief on loans to acquire a principal private residence (PPR) (terminated for any new cases after 31 December 2012 interest relief for PPRs purchased between 2004 and 2012 will continue until end 2017), relief for rental payments on private tenancies (terminated for any new cases after 7 December 2010 - Individuals who were in receipt of the relief at 7 December 2010 may continue to claim it until 2017) the rent-a-room relief and relief for expenditure on significant buildings or gardens. The cost of the reliefs and the number claiming the relief are set out on the following table:

Year	No.	Amount
Year 2014	Number of claimants	Cost - €m
Mortgage interest relief for PPRs	495,000	266.0
Year 2013	Number of claimants	Cost - €m
Rent-a-room relief	4,370	5.9
Expenditure on significant buildings or gardens	120	2.1

Capital Gains Tax Reliefs

For the purpose of capital gains tax there are three significant property based reliefs, the property purchase incentive, the Principal Private Residence relief and the farm restructuring relief.

The property purchase incentive relief was introduced in the Finance Act 2012. The relief applies to properties purchased between 7 December 2011 and 31 December 2014. For the relief to apply, the property must be owned for a period of at least 7 years. The rationale for the relief was to encourage investment in Irish property at a time when the property market was at a low ebb.

The Principal Private Residence Relief is available for individuals disposing of a house which was occupied by them as their only or main residence. The rationale for the relief is to ensure that the sale of a house, which will generally be replaced with another house, can be done on a tax-neutral basis.

Farm restructuring relief was introduced in the Finance Act 2013. The rationale for the relief is to facilitate the consolidation of land holdings, thereby increasing the productivity of those land holdings.

There is no statistical information available to the numbers availing of the Principal Private Residence relief and the farm restructuring relief or their cost to the Exchequer. The property purchase incentive had no cost to the Exchequer in the past full year since the entitlement to avail of the relief will not arise until a future point in time.

Capital Acquisitions Tax

The property based reliefs available for the purposes of capital acquisitions tax are set out on the following table. Costs and numbers availing relate to 2014.

Relief	Rationale for relief
Reduction of 90% in market value of agricultural property	To encourage entrepreneurial activity and the inter-generational transfer of business.
Reduction of 90% in market value of business property	To encourage entrepreneurial activity and the inter-generational transfer of business.
Exemption from CAT on the inheritance or gift of a residential property where the beneficiary has lived in the property as a sole or main residence for a specified period both before and after the inheritance/gift.	To prevent hardship for home-sharers.
Spouses and civil partners	Gifts and inheritances of property between spouses and civil partners are exempt from CAT.
Public or charitable purposes	To exempt from CAT gifts/inheritances of property where the property is applied for purposes that are public or charitable.
Heritage properties	To exempt from CAT gifts/inheritances of houses/gardens that are of national, historic or artistic interest and where there are reasonable viewing facilities offered to the public.

N/A indicates that the figures are not available.

Valued Added Tax

The VAT Consolidation Act 2010 provides for the making of Orders whereby VAT that has been paid may be refunded in certain circumstances. Three Refund Orders provide for the possibility of recovering VAT associated with property.

- VAT Refund Order (No. 15) of 1981 allows for certain construction costs incurred in the adaptation of a house for certain qualifying disabled persons. The Order does not allow for the initial construction cost of a house.

- Refund Order (No. 29) of 1996 allows for VAT refunds/remission for qualifying accredited diplomatic personnel who purchase property for use as embassies/consulates and also for use as their principal private residences.

- SI 201 of 2012 provides for refunds of VAT for farmers on the construction, extension, alteration or reconstruction of farm buildings which are used solely or mainly in the farming business.

Each of the Refund Orders provides for relief for a number of areas of expenditure, including the property costs, so it is not possible to provide the cost to the Exchequer that relates solely to the property costs.

Local Property Tax

In relation to LPT the following table sets out the exemptions and reliefs available.

LPT exemptions	Rationale for exemption
Properties fully subject to commercial rates	To provide relief for owners of properties that may be fully liable for both LPT and commercial rates charged by a local authority.
Long term mental or physical infirmity	To provide relief for owners of properties who are unable to continue living in their property because of a long-term mental or physical infirmity and where those properties are vacant. An exemption is also available for nursing homes that are used exclusively for the care of such persons.
Owned and sold by builders and developers	To provide relief for builders and developers who have built properties with the intention of selling them but that were not yet sold or rented out or occupied as a residence at the time of the first liability date of 1 May 2013. In the event of a sale before the next liability date of 1 November 2016, the exemption continues to be available for the purchasers of such properties.
Special needs accommodation	To provide relief for charitable and social housing bodies who own properties that are made available to persons who require special accommodation and support to enable them to live in the community because of old age, physical or mental infirmity or other reason.
Recreational activities	To provide relief for charitable bodies who own properties that are used solely as residential accommodation to facilitate recreational activities in the course of carrying out the body's main purpose.
Purchases in 2013	To provide relief, following the termination of mortgage interest relief, for persons who purchased properties during 2013 and who occupy the properties as their sole or main residence.
Unfinished housing estates	To provide relief, as had been done in relation to the Household Charge, to owners of properties that were located in housing estates that were certified as 'unfinished' by the Minister for the Environment, Community and Local Government.
Pyrite damage	To provide relief to owners of properties that have been appropriately certified as having been damaged to a significant extent by pyrite.
Incapacitated persons	To provide relief for owners of properties that have been acquired or adapted because of their suitability, or to make them suitable, for occupation by persons who are totally and permanently incapacitated from maintaining themselves by earning a living from working and whose condition dictates the type of property they can live in.
Reduced chargeable value of property	Rationale for reduction in chargeable value
Property adapted for occupation by certain disabled persons	To provide relief for owners of properties who have had to incur expenditure on construction or adaptation work to make the properties suitable for occupation by certain disabled persons where the work has the effect of increasing the value of the properties so that they move into a higher LPT valuation band with a higher tax liability.
Deferral of payment of LPT	Rationale for deferral
Income threshold	To provide relief for persons whose annual income does not exceed a specified threshold by allowing them to defer payment of either the full or partial LPT liability until their circumstances improve or their property ceases to be owned by them.
Estate of deceased person	To provide relief for executors and administrators of a deceased person's estate to give them an opportunity to transfer ownership of any residential property to a beneficiary or to sell the property and distribute the proceeds of sale.
Insolvency	To provide relief for persons who have entered into certain formalised insolvency arrangements for the management of their debts until such time as the arrangements cease to have effect.
Hardship	To provide relief for persons who suffer a significant financial loss or incur a significant expense that is unexpected and unavoidable and as a result of which are unable to pay their LPT liability.

In relation to the LPT exemptions, I am advised by the Revenue Commissioners that the cost to the Exchequer for 2014, the most recent year available, is estimated to be €12 million in total. Exemptions have been claimed for around 41,000 properties. LPT deferrals have resulted in delayed LPT receipts estimated at €7 million in 2014. Claims for deferral have been made in respect of around 27,000 properties for 2014. I am further advised that costs for individual exemptions or deferrals are not available at this time.

Stamp Duty

Finally, the following table sets out the relief or exemption from stamp duty for transactions associated with property. Costs and numbers refer to 2014 data.

Stamp Duties Consolidation Act 1999 Exemptions and reliefs from stamp duty:

Section	Relief	Rationale for relief
Section 79	Associated companies	Exemption from stamp duty is available where property is transferred between companies with a significant degree of common ownership
Section 81AA	Young trained farmers	Exemption from stamp duty is available to encourage the early transfer of farmland to young farmers with approved educational qualifications.
Section 82	Charitable bodies	Exemption from stamp duty is available where property is transferred or leased to a charitable body.
Section 82B	Approved sports bodies	Exemption from stamp duty is available where land is transferred to an approved sports body where the land is used for the sole purpose of promoting athletic or amateur games or sports.
Section 82C	Pension schemes and charitable bodies	Exemption from stamp duty is available where property is transferred by pension schemes and charitable bodies
Section 93	Industrial and provident societies	Exemption from stamp duty is available where a house is transferred or leased by a registered industrial and provident society to a member of the society for the purpose of providing housing for members of the society.
Section 93A	Approved voluntary body	Exemption from stamp duty is available where land is transferred or leased to a voluntary body for the purpose of providing social housing.
Section 94	Land Commission	Exemption from stamp duty is available where land is purchased from the Land Commission
Section 95	Commercial woodlands	Partial relief from stamp duty is available to encourage the sale or lease of land on which trees have been planted as a commercial undertaking.
Section 96	Spouses and civil partners	Exemption from stamp duty is available where property is transferred between spouses and civil partners.
Section 97	Dissolution of a marriage	Exemption from stamp duty is available where property is transferred on foot of a court order between divorced spouses and between civil partners where the civil partnership has been dissolved or annulled
Section 97A	Cohabitants	Exemption from stamp duty is available where property is transferred on foot of a court order from one cohabitant to his or her cohabitant.
Section 98	Foreign property	Exemption from stamp duty is available in respect of transfers of property that is situated outside the State.
Section 99	Dublin Docklands Development Authority	To encourage development in the docklands area of Dublin, exemption from stamp duty is available where land is acquired by the Dublin Docklands Development Authority
Section 99A	Courts service	Exemption from stamp duty is available where land is acquired by the Courts Service.
Section 100	Temple Bar Properties Limited	To encourage development in the Temple Bar area of Dublin, exemption from stamp duty is available where land is acquired or leased by Temple Bar Properties
Section 103	Shared ownership leases	Exemption from stamp duty is available to assist those on low incomes to purchase their own homes under a shared ownership lease.
Section 106A	National Building Agency Limited	Exemption from stamp duty is available where land is transferred or leased to the National Building Agency Limited for social housing purposes
Section 106B	Housing authorities and Affordable Homes Partnership	The stamp duty charge is capped at €100 where property is transferred or leased to certain social housing bodies.
Section 106C	Grangegorman Development Agency	To encourage development at Grangegorman, exemption from stamp duty is available where land is acquired or leased by the Grangegorman Development Agency
Section 108AA	Strategic Banking Corporation of Ireland	Exemption from stamp duty is available where property is transferred or leased to the Strategic Banking Corporation of Ireland which was established by the Minister for Finance to improve the supply of funds to SME's.
Section 108B	National Asset Management Agency	Exemption from stamp duty is available where property is transferred or leased to the National Asset Management Agency
Section 108C	Ireland Strategic Investment Fund	Exemption from stamp duty is available where property is transferred or leased to a Fund Investment Vehicle under the control of the NTMA
Schedule 1	Consanguinity relief	A 50% reduction in the rate of stamp duty encourages early transfers of farmland to certain relatives who will actively carry on farming activities.

N/A indicates that the figures are not available.

* indicates that the number of claimants is low (usually less than 10) and cannot be provided to protect taxpayer confidentiality.