Budget 2019 was eagerly awaited by those in the Property Industry. Government recognise the need for new housing more so than ever so the proposals are welcome but will need to be actioned and monitored to deliver. There were no significant radical tax measures for those involved in the Property business.
The Minister announced a €2.3b contribution to the housing program next year which is an increase of 26% over the prior year with an amount of €1.25b being allocated for up to 10,000 new homes.
In addition a fund is being established to provide subsidies towards affordable homes. An amount of €310m is being allocated over 3 years to provide towards a further 6,000 units.
Such measures are positive but need to be actioned rapidly as it takes significant time to deliver housing particularly with the labour market being as challenging as it is currently.
The reintroduction of interest relief at 100% against residential rents from January 2019 is very welcome and will help a lot of landlords and encourage them to stay in the rental market. Currently the relief is at 85% of the interest expense incurred and it was to be increased at an amount of 5% per annum each year to 2021 until it was fully restored. Given most of Ireland’s landlords are Irish Individuals, this will assist to a degree.
Local property tax
A review of local property tax is ongoing given house prices have increased since this tax was introduced in 2013. The Minister mentioned that any changes planned will be moderate and affordable. Whilst akin to rates on a rented residential property, there continues to be no tax relief available for this cost.
Given the budgetary constraints, there were no significant measures in terms of taxation on property announced. There has been a lot of discussion around bringing vacant property into the market and some commentators had called for a low capital gains tax rate to be considered to free up some units into the market. This hasn’t materialised yet but perhaps the Finance Bill might go further in this regard.
In terms of attracting labour back from abroad, there are no incentives or help to attract people back and the reality is that in order to deliver so many units, we will need more tradesmen and some of these people are those who left some years ago. At a minimum some have called for the costs of relocation (perhaps capped) to be tax deductible from future income.
There had been calls for some other incentives around VAT reduction / refunds to those who invest but likewise this didn’t materialise.
There had been other possible changes mentioned in the lead up to the budget which could well have impacted negatively but these did not happen either.
So on balance, no significant changes in the market from a tax perspective and it remains to be seen how the funds allocated to housing will be deployed and at what pace.