Budget April 2009

The following are the principal measures in the Budget affecting theproperty industry.

INCOME TAX 

Mortgage Interest Relief

Mortgage interest relief will be discontinued for any mortgage over 7 yearsfrom 1 May. 

Restriction in Interest Relief Rented Residential Property

The level at which interest re-payments can be claimed against tax forresidential rental properties is being reduced from the existing 100% to 75%.This measure will apply to both new and existing mortgages. Commercialproperties are not affected.

Stamp Duty “Trade-in” scheme

Establishment of a Stamp Duty “trade-in” scheme, under which no stamp dutyis payable by a person who accepts a traded-in property in exchange or partexchange for a new house/apartment. Stamp Duty will apply when the personsubsequently sells on the ‘swapped’/traded-in house. Full details will appearin the Finance Bill

CAPITAL GAINS TAX  

Rate

The capital gains tax rate is being increased from 22% to 25% in respect ofdisposals made from midnight on 7 April 2009.

Rate

The capital acquisitions tax rate is being increased from 22% to 25% inrespect of gifts or inheritances made from midnight on 7 April 2009.

Threshold

The current thresholds of €542,544 (Group A: parents to child), €54,254(Group B: between related persons), and €27,127 (Group C: between non-relatedpersons) are being reduced by 20% to €434,000, €43,400 and €21,700respectively. This reduction applies in respect of gifts or inheritances takenfrom midnight on 7 April 2009.

Income and losses from dealing in residential development land

1. Thespecial 20% rate applied to the trading profits from dealing in or developingresidential development land is being abolished. The income will be charged atthe person’s relevant marginal rates of income tax or the 25% rate ofcorporation tax. This change will apply as regards Income Tax for the year ofassessment 2009 and subsequent years and as regards Corporation Tax foraccounting periods ending on or after 1 January 2009 (with accounting periodsstraddling that date being deemed for this purpose to be separate accountingperiods).
   
   
2. Wheretrading losses have been incurred from dealing in or developing residentialdevelopment land in circumstances where, if trading profits had been made, theywould have been eligible to be taxed at 20%, and a claim to use those losseshas not been made to and received by the Revenue Commissioners before 7 April2009, the losses from today will generally only be relievable (on a valuebasis) up to a maximum of 20%. Where any such loss is a terminal loss, therestriction will be implemented by “ring-fencing” the loss.

Full details of both changes will be contained in the Finance Bill