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Dáil Éireann Debate, Wednesday - 24 March 2021

Wednesday, 24 March 2021

Questions (477)

Brendan Griffin

Question:

477. Deputy Brendan Griffin asked the Minister for Finance if his Department has considered or researched the possible impacts of providing a reduced rate of capital gains tax for property owners selling a home to a first-time buyer to help first-time buyers gain a competitive advantage over speculators; and if he will make a statement on the matter. [15079/21]

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Written answers

In responding to the Deputy's question, I would draw attention to the existing reliefs that are already available to property owners selling their home and to first-time buyers.

Capital Gains Tax

Capital gains tax (CGT) is chargeable on any gain arising on the disposal of an asset at the rate of 33%. The first €1,270 of chargeable gains of an individual in any year are exempt from CGT. 

 Where certain conditions are met, a person may be able to avail of relief from CGT in respect of a gain arising on the disposal of a property.

 If the property was occupied by an individual as his or her principal private residence for all or part of his or her period of ownership, then full or partial relief from CGT will be available where a chargeable gain arises on the disposal of that property. The last 12 months of ownership of the house by the individual is treated as a period of occupation for this purpose.

 If the property was acquired between 7 December 2011 and 31 December 2014, then full or partial relief from CGT will be available where a chargeable gain arises. Full relief will apply if the property has been owned by an individual for a period of 7 years. Where the property has been owned by an individual for a period of more than 7 years, relief is given on the gain in the proportion that the period of 7 years bears to the period of ownership. For example, if the property was owned for 8 years, relief will be given on 7/8ths of the gain. Where the property is held for at least 4 years and less than 7 years, any gain will not be liable to CGT where the disposal is made on or after 1 January 2018.

 To be eligible for principal private residence relief or the relief for property acquired between 7 November 2011 and 31 December 2014, a person is not required to dispose of a property to a buyer within a particular category.  Guidelines on both reliefs are available on the Revenue website at: https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/index.aspx

  Help to Buy Scheme

An increase in the supply of new housing remains a priority aim of Government policy. The Help to Buy scheme is specifically designed to encourage an increase in demand for affordable new build homes in order to encourage the construction of an additional supply of such properties.

The Help to Buy incentive is a scheme that is targeted at first time purchasers and assists them with a deposit to buy or build a new house or apartment.  The incentive gives a refund on Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to certain limits set out in section 477C Taxes Consolidation Act 1997.

 In August 2020, an enhancement to the Help To Buy scheme was made as part of the July Stimulus package, which was later extended in Finance Act 2020. In summary, where a first-time purchaser

- enters into a contract for the purchase of a new home, or

- makes the first draw down of the mortgage in the case of a self-build;

during the period 23 July 2020 and 31 December 2021, they can avail of increased relief under Help to Buy scheme, based on the lesser of:

- €30,000 (increased from €20,000),

- 10 per cent (increased from 5 per cent) of the purchase price of a new home or the completion value of the property in the case of self builds, or,

- the amount of Income Tax and DIRT paid in the four years prior to making the application.

This is subject to the person meeting a number of conditions set out in the legislation.  Further guidance on the Help To Buy scheme is available on the Revenue website at: https://revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-46.pdf.

As the Deputy will be aware, all taxes are subject to ongoing review which includes the consideration and assessment of rates along with any associated reliefs and exemptions. Tax policy in this area is reviewed by the Tax Strategy Group as part of the annual Budget and Finance Bill process and considered in the wider tax policy context.

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