The increase in stamp duty on commercial property from 6% to 7.5% was unexpected. It represents a 25% increase in the relevant tax rate.
The last 12 months alone have seen overseas investors spend over €5 billion on commercial property in Ireland and they will feel cheated as the value is reduced unexpectedly by 1.5% and the sudden and unflagged changes to tax rates is not good for Ireland’s reputation as a place to do business and invest. It leaves uncertainty as to what might come in the future in terms of other taxes on commercial and residential property investment in Ireland.
The motivation for the stamp duty increase is likely to be a “back door” way to tax vulture funds and REITs who have been called out for aggressive tax planning to shelter gains and profits from Irish tax.
The initiative we would have liked to have seen was a reduced residential rental tax for landlords of residential property whether owned in a personal name or personal company where the tax on profit rents would be capped at 25%. This could be achieved in a corporate setup by eliminating a close company surcharge on rents. We believe this measure would re-energise the investor market for residential property and help with the supply of new residential lettings across the country and the delivery of social and affordable housing by the private sector.