Emmet Stagg
Ceist:80 Mr. Stagg asked the Minister for Finance the effect, if any, he expects the reduction in capital gains tax introduced on 3 December 1997 to have on the housing market. [5577/98]
Written Answers - Capital Gains Tax.
I remind the Deputy that the gain made on the sale of an individual's principal private residence does not give rise to capital gains tax. The reduction in the rate of capital gains tax will, therefore, apply only to the sale of investment property. While it may affect the demand for such property, the reduction will, in my view, also have a positive effect on the number of disposals taking place. Consequently, I would expect to see a greater number of housing units, which were being held as investment properties, coming on to the property market.
However, it should be borne in mind that profits earned from dealing in property as a trade, as distinct from disposing of assets, are liable to income tax or corporation tax rather than capital gains tax. In such situations the reduction in the standard rate of capital gains tax will have no impact.