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Budget 2009
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Budget April 2009
The following are the principal measures in the Budget affecting the property industry.
INCOME TAX
Mortgage Interest Relief
Mortgage interest relief will be discontinued for any mortgage over 7 years from 1 May.
Restriction in Interest Relief Rented Residential Property
The level at which interest re-payments can be claimed against tax for residential rental properties is being reduced from the existing 100% to 75%.This measure will apply to both new and existing mortgages. Commercial properties are not affected.
Stamp Duty “Trade-in” scheme
Establishment of a Stamp Duty “trade-in” scheme, under which no stamp duty is payable by a person who accepts a traded-in property in exchange or part exchange for a new house/apartment. Stamp Duty will apply when the person subsequently sells on the ‘swapped’/traded-in house. Full details will appear in the Finance Bill
CAPITAL GAINS TAX
Rate
The capital gains tax rate is being increased from 22% to 25% in respect of disposals made from midnight on 7 April 2009.
Rate
The capital acquisitions tax rate is being increased from 22% to 25% in respect 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-related persons) are being reduced by 20% to €434,000, €43,400 and €21,700respectively. This reduction applies in respect of gifts or inheritances taken from midnight on 7 April 2009.
Income and losses from dealing in residential development land
1. The special 20% rate applied to the trading profits from dealing in or developing residential development land is being abolished. The income will be charged at the person’s relevant marginal rates of income tax or the 25% rate of corporation tax. This change will apply as regards Income Tax for the year of assessment 2009 and subsequent years and as regards Corporation Tax for accounting periods ending on or after 1 January 2009 (with accounting periods straddling that date being deemed for this purpose to be separate accounting periods).
2. Where trading losses have been incurred from dealing in or developing residential development land in circumstances where, if trading profits had been made, they would have been eligible to be taxed at 20%, and a claim to use those losses has not been made to and received by the Revenue Commissioners before 7 April2009, the losses from today will generally only be relievable (on a value basis) up to a maximum of 20%. Where any such loss is a terminal loss, the restriction will be implemented by “ring-fencing” the loss.
Full details of both changes will be contained in the Finance Bill