Dáil Éireann Debate, Tuesday - 30 November 2021
196. Deputy Michael Collins asked the Minister for Finance if tax incentives are available for persons who are purchasing a residential and commercial property; and if he will make a statement on the matter. [58998/21]
View answerI am advised by Revenue that, where the relevant conditions are met, the following tax-based measures may be available for persons who purchase a residential or a commercial property:
Help to Buy Scheme
Help-to-Buy (HTB) is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. This measure gives a refund of Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in the legislation. The main aim of the policy underpinning the design of scheme is to help encourage the building of additional new properties.
A claimant under the scheme must make an application confirming he or she meets various conditions specified in the section. The main conditions include that the claimant is a first-time purchaser, the claimant has a qualifying loan on the property in question and the claimant has completed a tax return form and is tax compliant for each of the tax years for which a claim is being made. Also, the new property must be occupied as the sole or main residence of a first-time purchaser.
The legislation is very specific as to the definition of a qualifying residence. It must be a new building which was not, at any time, used or suitable for use as a dwelling. The HTB scheme operates by way of a payment being made at deposit stage following the signing of a contract to purchase, or, in the case of a self-build, following the drawdown of the first tranche of the relevant mortgage. The HTB scheme has been widely publicised since its announcement in 2016, particularly by financial institutions providing mortgages.
The Living City Initiative
The Living City Initiative (LCI) is a tax incentive aimed at the regeneration of the historic inner cities of Dublin, Cork, Galway, Kilkenny, Limerick and Waterford. The scheme provides income or corporation tax relief for qualifying expenditure incurred in refurbishing/converting qualifying pre-1915 buildings which are located within 'Special Regeneration Areas'.
There are three types of relief available; owner occupier residential relief, rented residential (landlord) relief and commercial or retail relief. The rented residential relief was introduced with effect from 1 January 2017. Owner occupier relief is given by writing off qualifying expenditure incurred on the property against total income at a rate of 10% per annum over ten years. Rented residential and commercial relief is given by way of capital allowances, with eligible expenditure incurred on the property being written off over seven years at a rate of 15% per annum over 6 years and 10% in the final year.
Sections 372AAA to 372AAD Taxes Consolidation Act 1997 outline the conditions applicable to each element of the LCI. Further information on those conditions are available on the Revenue website at: www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-10/10-13-01.pdf .
Stamp duty
Where there is a transfer of residential property, stamp duty is charged at the rate of 1% on the first €1 million of the consideration and 2% on any excess over €1 million. Transfers of non–residential property, including agricultural land, attract a stamp duty charge at the rate of 7.5% of the consideration.
Section 83D of the Stamp Duties Consolidation Act (SDCA) 1999 provides for a refund of stamp duty paid on the transfer of non-residential land where the land is subsequently developed for residential purposes. To qualify for a refund, construction operations must commence on the land within the period of 30 months of the transfer, but no later than 31 December 2022. The amount refundable is calculated by reference to the difference between stamp duty paid at the rate of 7.5% and the stamp duty that would have been paid had the rate been 2% (2% was the rate that applied to the transfer of non-residential property prior to 11 October 2017). The refund scheme applies to both single dwelling units (one-off houses) and multi-unit developments. In the case of multi-unit developments, 75% of the total surface area of the land must be occupied by dwelling units, or the gross floor space of the dwelling units must account for at least 75% of the total surface area of the land. The refund scheme is intended to encourage developers to convert non-residential land into residential land, thereby creating extra housing capacity.
