Summary of some of the main tax measures affecting Property Transactions

STAMP DUTY

A new system for applying stamp duty on non-residential property will be introduced with effect from 7th December, 2011. A single rate of 2%will apply on the entire consideration

Non-residential rates

Rates on residential property will continue to apply at 1% up to €1 million and 2% thereafter.

Consanguinity relief for Stamp Duty

This relief which gives a 50% deduction on the rate applying to transfers between certain relatives, was abolished in Budget 2011 for transfers of residential property only. This relief will still continue to apply to transfers of non-residential property, such as land, up to the end of 2014. It will then be abolished after 1st January 2015.

CAPITAL ACQUISITIONS TAX (CAT)

The rate of CAT is to increase from 25% to 30%

There is a reduction in the group A tax free threshold as per the table below. The group B & C thresholds remain unchanged.

The new 30% rate and the revised threshold apply on gifts and inheritances taken after 6th December 2011. There was no change to the conditions or operation of Agricultural Relief or Business Relief.

CAPITAL GAINS TAX (CGT)

The rate of CGT is to increase from 25% to 30%

Retirement Relief – Intra-family transfers

Full retirement relief will continue to be available (subject to the usual conditions) for farmers transferring assets who are aged between 55 and 66 years. An upper limit of €3 million will be imposed on the value of the assets eligible for the relief where the transferring individual is aged over 66 years. Where an individual is currently aged 66 years or will reach 66 before 31st December 2013 the normal no-limit relief will continue to apply.

Retirement Relief – Non-family transfers

The current upper limit of €750,000 will continue to be available (subject to the usual conditions) for farmers transferring assets who are aged between 55 and 66 years. This limit will be reduced to €500,000 where the transferring farmer is aged over 66 Again a transitional arrangement will apply for individual aged 66 or who will be 66 before 31/12/2013 whereby the €750,000 limit will continue to apply.

New CGT relief for newly purchased property

A new relief has been introduced for properties bought between 6th December 2011 and the end of 2013. Where such a property is held for more than 7 years then any capital gain that accrues in that seven year period will not be subject to CGT.

MORTGAGE INTEREST RELIEF

Mortgage interest relief is to apply at 30% for first time buyers who took out their first mortgage for their principal private residence in the period from 1st January 2004 to 31st December 2008. This relief will be available on interest paid between 2012 and 2017.

First time buyers will get mortgage interest relief at a rate of 25% for mortgages taken out during 2012. Non-first time buyers will benefit from relief at 15 per cent.

Mortgage interest relief will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018.

If you are carrying out a property transaction which will be affected by any of the above measures please contact Maria Connolly, Solicitor, 26 North Road, Monaghan, 047 82888 for information and advice.