Housing Crisis - 7 year Capital Gains Relief - End the schema NOW to release development land

Voluntary

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Investors who bought development land between 7 December 2011 to 31 December 2014 have been offered full Capital Gains Tax exemption on condition they hoard the land for a minimum of 7 years, so until sometime between Jan 2019 and Jan 2022. No sane investor who bought development land at that time is going to sell or build on it now. It would be pure idiocy and contra-logical. Funds with shareholders are not even legally allowed to do so, as selling the land before the exemption can be used would mean the management could be accused of 'acting against the interests of shareholders'. No 3% land hoarding tax can compensate that as the capital gains reach often over 100%.

There were some good intention behind this legislation in 2013, however the times were different, we had too many houses built, no one wanted to buy development land or houses.
Everything has changed since then.

We are in the middle of housing crisis and development land isn't being built on.

Now, my proposition is to change the CGT exemption rule and shorten the 7 years ownership period so the land hoarders previously encouraged to hoard can release the land.
What I'd suggest is that, due to the housing crisis, the minimum ownership period to qualify for the exemption ends immediately, so whoever bought development land within that period can sell immediately and still be exempt from the CGT. We need to stop forcing owners to hoard land right now.

This change could come into effect with the 2018 budget and it's budget neutral as will cost nothing. The Capital Gains tax on these lands will not be collected any way.

If we don't do this then the land purchased over that period will only start getting released between Jan 2019 and Jan 2022.

7 Year Capital Gains Tax Relief - TRA Professional
If a property which is acquired between 7 December 2011 and 31 December 2014 is sold before the 7th anniversary of the date on which it was acquired no relief will be available as the 7 year holding period will not be met.
 


Hans Von Horn

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Investors who bought development land between 7 December 2011 to 31 December 2014 have been offered full Capital Gains Tax exemption on condition they hoard the land for a minimum of 7 years, so until sometime between Jan 2019 and Jan 2022. No sane investor who bought development land at that time is going to sell or build on it now. It would be pure idiocy and contra-logical. Funds with shareholders are not even legally allowed to do so, as selling the land before the exemption can be used would mean the management could be accused of 'acting against the interests of shareholders'. No 3% land hoarding tax can compensate that as the capital gains reach often over 100%.

There were some good intention behind this legislation in 2013, however the times were different, we had too many houses built, no one wanted to buy development land or houses.
Everything has changed since then.

We are in the middle of housing crisis and development land isn't being built on.

Now, my proposition is to change the CGT exemption rule and shorten the 7 years ownership period so the land hoarders previously encouraged to hoard can release the land.
What I'd suggest is that, due to the housing crisis, the minimum ownership period to qualify for the exemption ends immediately, so whoever bought development land within that period can sell immediately and still be exempt from the CGT. We need to stop forcing owners to hoard land right now.

This change could come into effect with the 2018 budget and it's budget neutral as will cost nothing. The Capital Gains tax on these lands will not be collected any way.

If we don't do this then the land purchased over that period will only start getting released between Jan 2019 and Jan 2022.

7 Year Capital Gains Tax Relief - TRA Professional
Will there be a glut of development land when the scheme comes to an end as new rules on a hoarding tax come to bite?

Thee is always a problem when Government starts to interfere with the free market. Limiting building of homes to zoned land in th efirst place tends to create artificial scarcity of building land.

The price of zoned land is clearly linked to the quantity zoned and serviced.


This link details the location of land zoned for housing
ArcGIS Web Application
 

clearmurk

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Investors who bought development land between 7 December 2011 to 31 December 2014 have been offered full Capital Gains Tax exemption on condition they hoard the land for a minimum of 7 years, so until sometime between Jan 2019 and Jan 2022. No sane investor who bought development land at that time is going to sell or build on it now. It would be pure idiocy and contra-logical. Funds with shareholders are not even legally allowed to do so, as selling the land before the exemption can be used would mean the management could be accused of 'acting against the interests of shareholders'. No 3% land hoarding tax can compensate that as the capital gains reach often over 100%.

There were some good intention behind this legislation in 2013, however the times were different, we had too many houses built, no one wanted to buy development land or houses.
Everything has changed since then.

We are in the middle of housing crisis and development land isn't being built on.

Now, my proposition is to change the CGT exemption rule and shorten the 7 years ownership period so the land hoarders previously encouraged to hoard can release the land.
What I'd suggest is that, due to the housing crisis, the minimum ownership period to qualify for the exemption ends immediately, so whoever bought development land within that period can sell immediately and still be exempt from the CGT. We need to stop forcing owners to hoard land right now.

This change could come into effect with the 2018 budget and it's budget neutral as will cost nothing. The Capital Gains tax on these lands will not be collected any way.

If we don't do this then the land purchased over that period will only start getting released between Jan 2019 and Jan 2022.

7 Year Capital Gains Tax Relief - TRA Professional
Great post, and shows how the "market" is not a market at all, but being deliberately manipulated to boost house prices.
 

Watcher2

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The scheme should be ended. You can't however apply CGT now because you would be in breach to the detriment of the land owners. Give the CGT exemption to release the land now on the basis it's developed within x years.
 

Voluntary

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The scheme should be ended. You can't however apply CGT now because you would be in breach to the detriment of the land owners. Give the CGT exemption to release the land now on the basis it's developed within x years.
I think that to work would need to be unconditional. The current land owners are not necessarily ones who will develop them, investors bought land and not developers, they may not be interested in building at all, but selling only. Someone else will buy it and build. If the land is going to be sold to a developer, how would the current owner assure the land's future?
 

Watcher2

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I think that to work would need to be unconditional. The current land owners are not necessarily ones who will develop them, investors bought land and not developers, they may not be interested in building at all, but selling only. Someone else will buy it and build. If the land is going to be sold to a developer, how would the current owner assure the land's future?
All issues would need to be worked through. I don't see it as something too difficult though.
 

Gin Soaked

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All issues would need to be worked through. I don't see it as something too difficult though.
And it is clearly in the national interest... which is a a caveat to property rights in the constitution.
 

Sister Mercedes

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Usual bollox in this country. Have a tax rate too high and then have loads of schemes to avoid paying it.

Reduce tax rates, tax everything and everyone and get rid of all the schemes.
 

Voluntary

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Usual bollox in this country. Have a tax rate too high and then have loads of schemes to avoid paying it.

Reduce tax rates, tax everything and everyone and get rid of all the schemes.
That's actually what government is proud of. They call it targeted taxation and use it to move social economy towards planned directions. The thing is they hardly ever manage to predict the real unwanted side effect consequences.
The result is usually worse than it would otherwise be. Bad action is worse than inaction. Smart asses think they can out-smart the market, but it's usually a lost battle.

At least what they should do now is to admit the schema is now contra-productive and harm the economy so they have a reason to fix it immediately.
 
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Voluntary

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And there's the other thing which forces land owners to hoard. The 33% CG tax on assets purchased before DEC 2011 or after DEC 2014.

These development lands will not get released until the CG rate goes back to the pre-recession rate of 20%.
Investors know this is going to happen, so there's no point cashing on profits today, if they can hold and keep more gains in few years time. Especially in times when the land supply is very restricted.
 

Dame_Enda

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A state sponsored property bubble.
 

Sister Mercedes

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At the time it was used as a mechanism for husbands in debt to transfer assets to wives or other family members. So long as the wife didn't sell before the 7 years there'd be no tax consequence. It was another of those hidden bailouts...
 

Sister Mercedes

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A state sponsored property bubble.
It isn't even as planned as that. You've got politicians and civil servants who have no idea how markets operate and let themselves be influenced by every snake oil salesman with a hidden agenda.
 

GDPR

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The law of unintended consequences. In Estonia they recently raised the tax on alcohol, no doubt thinking it a clever move. But they got hit by a double whammy. The Finns stopped taking the short trip over on the ferry to buy booze and Estonians started getting their booze from Latvia.

Sent from my SM-A320FL using Tapatalk
 

Voluntary

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No FG fan here yet! They are gone back to HQ for the party line on this.
I don't think any other political party offers any better solutions. I had some hopes for Renua, but I just wouldn't accept their anti abortion position. They also haven't managed to take on any quality local representatives.
 

im axeled

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All issues would need to be worked through. I don't see it as something too difficult though.
you are not taking into account that ireland in its present form is a curroupt a kip as there is in the eu
 


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