Blanket 7 year Capital Gains Tax exemption change could see speculators cash-in - Pearse Doherty TD
Sinn Féin Finance Spokesperson Pearse Doherty TD has said the government’s blanket approach on changing the 7 year Capital Gains Tax (CGT) exemption would see certain property speculators net massive tax free windfalls with no impact on land hoarding or housing supply.
Deputy Doherty said the approach taken was too broad and needed to be narrowed so that it only applies to zoned land ready for development. More importantly he said the real issue is the 5 year Dividend Withholding Tax vulture funds can avail of.
Teachta Doherty said:
“The move to change the number of years an individual must hold land before it can be sold CGT free from 7 to 4 would be a very expensive move that benefit certain property speculators who bought property and land, with no impact on land hoarding.
"While there is merit in the change in relation to land that is zoned there is absolutely no justification for a broader change encompassing all land and property.
"Sinn Féin will argue strongly in the Finance Bill that the change be limited to land with residential potential so that certain property speculators don’t receive massive untaxed windfalls.
"However, even if this approach was adopted the move would still be missing the wood for the trees.
"There has been much commentary on NAMA’s bulk sales in recent weeks and its impact on land hoarding and housing supply.
"When we look closely at the figures though we see that 80% of this NAMA land was sold either before or after the period to which the 7 year rule applied and most of it was sold to vulture funds that don’t pay CGT anyway.
"So it is not this 7 year exemption that is the main driver of land hoarding.
"The real issue is the exemption from the 20% Dividend Withholding Tax that vulture funds pay if they hold land for 5 years or more.
"This change was brought in last year and internal Department of Finance documents show concerns that it would clog up the market.
"It is this exemption which must be ended. Allowing certain property speculators profiteer by changing the 7 year CGT rule will have no impact.
"The 5 year rule that has incentivised vulture funds to hold on to land until 2020, 2021 and 2022 so that they can sell off tax free. This is where the focus of those of us who wish to tackle land hoarding and supply bottlenecks must be.”