Recent emails obtained under Freedom of Information by Pearse Doherty, Sinn Fein’s Finance spokesman, revealed concerns the Revenue Commission has regarding the Department of Finance’s capital gain tax exemptions introduced in last year’s bill.
Revenue has warned the Department of finance that it’s tax exemption measures could cause property fund to hoard and sit on its properties instead of selling them, restricting supply and causing difficulties in the housing market.
The five year capital gains tax exemption applied to funds that invest in property for capital gain. It was implemented to encourage these funds to purchase and develop more land to boost housing supply in the market. The tax exemption allows the funds to be avoid any tax charged on the profit made when selling an asset during a five year period.
The problem is that due to the tax exemption, property funds are less likely to sell their assets before the five year term ends even through there is a major need for residential housing in the market today. A Revenue official said that many properties “won’t be released until 2019-2021”. Holding onto the properties will likely further contribute to the driving up of prices in the market.
Pearse Doherty of Sinn Fein believes that “it is unacceptable that [the tax exemption measure] was brought in without this analysis being presented”. Many other question why the government is introducing more speculative land tax incentives when property prices are inflating.