Dáil Éireann Debate, Tuesday - 22 March 2022
272. Deputy Seán Canney asked the Minister for Finance if he will waive capital gains tax on second-hand homes which could be brought to the market or willed to family members to help the housing crisis; and if he will make a statement on the matter. [14990/22]
View answerAt the outset, the Deputy should note that I am assuming he is referring to a second property as opposed to a second-hand property, and I am responding to his question accordingly. I would firstly like to note that, for property owners selling their own home there is an exemption from Capital Gains Tax (CGT) for the transfer or sale of an individual’s principal private residence (PPR), including land of up to one acre around the residence. More information is available at www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/index.aspx.
Taxes on capital including CGT ensure that taxation is not focused solely on income and that those who benefit from gains in the value of their assets are included within the tax net on an equitable basis. Where an individual disposes of a second property, whether through a sale or a gift to a family member, CGT is currently levied at 33% on the chargeable gain usually the difference between the price paid for the asset and the price it is disposed for.
I would note that in general where the property is inherited after the death of the owner no CGT is due. If the property is gifted while the owner is still alive, while CGT and CAT may be both due, you can use the CGT paid as a credit against the CAT due. The credit cannot be greater than the amount of CAT which is due on the gift or inheritance.
While I can understand the thinking behind the proposal to exempt property transactions from CGT in order to encourage property owners to sell or gift their property to family members, taxation is only one of the policy levers available to the Government through which to boost overall housing supply. The presumption should be that non-tax measures should be considered before the use of a tax–based measure. I would wish to avoid any tax expenditures that could distort the market, particularly where it is not clear that they would in this instance result in additional supply and could reduce the availability of rental properties. Such an exemption would also be unlikely to reduce prices for purchasers. Previous experience with tax incentives in this area has demonstrated a considerable potential for unexpected consequences to such changes which can end up being unhelpful to the broader market. Therefore, I do not currently propose to exempt second properties from CGT.
The Government is however, very conscious of the need to do everything it can to address the difficulties in the housing market. The comprehensive "Housing for All" plan published last year is intended to deliver more homes of all types for people with different housing needs. Housing for All includes actions aimed directly at increasing supply in the housing market. These include 33,000 new units per year, on average, until 2030, (including over 10,000 social and 6,000 affordable units) and an average of €2.4 billion per year in direct State funding to 2025, and €3.5 billion in funding through the Land Development Agency. The plan commits to a supply of an unprecedented 4,000 affordable purchase homes, on average, every year for families, couples and single people.
