Budget 2014 appears to have been broadly positive towards the property industry, with the introduction of the Home Renovation Incentive and, most importantly, the extension of the Capital Gains Tax relief to property purchased before the end of 2014 – provided same is held for a period of seven years. It is great to see NAMA, an agency that has such a huge stake in the Irish property market, being tasked with wielding some that influence to benefit the marketplace.
Also, we are delighted to see Cork, Galway, Kilkenny and Dublin included within the Living City Initiative, introduced last year for Limerick and Waterford. This initiative aims to encourage home-owners and families to remain in the cities, rather than being shipped out to the suburbs as soon as their family outgrows apartment living – this ties in with our current Take Me Home project, that has broadly the same aims.
Michael Noonan’s Budget 2014 speech:
In my previous Budgets, I have included important measures that have begun to return growth to the construction sector. I introduced these, as I have continually stated, with the objective of helping the construction and development sector return to sustainable levels in line with most economies. No sector has been hit harder since 2008 and a return to a normalised construction and development sector is needed to provide jobs for the thousands of unemployed construction workers.
Home Renovation Incentive (HRI)
I am introducing a home renovation tax incentive scheme. The Home Renovation Incentive will provide an income tax credit to homeowners who carry out renovation and improvement works on their principal private residences in 2014 and 2015. The incentive is payable over the two years following the year in which the work is carried out. The credit will be calculated at a rate of 13.5 per cent on all qualifying expenditure over €5,000 up to a maximum of €30,000. Qualifying works include extensions and renovations to the home, window-fitting, plumbing, tiling and plastering. This incentive will support fully tax compliant builders and will move activity out of the shadow economy into the legitimate economy as all expenditure and relief claims will have to be registered electronically with the Revenue Commissioners.
Living City InitiativeLast year I announced the Living City Initiative for Limerick and Waterford. Following further consideration including a cost benefit analysis that I am publishing today, I have decided to extend the initiative to Cork, Galway, Kilkenny and Dublin and broaden the eligibility criteria to include all buildings built prior to 1915. The initiative should assist the regeneration of retail and commercial districts and encourage families to live in the historic buildings in our city centres. It will be commenced after EU state-aid approval is secured.
Capital Gains Tax Relief
In Budget 2012, I announced an incentive that exempted property purchased by the end of 2013 from Capital Gains Tax if held for at least seven years. I am extending the purchase period to the end of 2014.
Real Estate Investment TrustsFollowing the successful launch of the Real Estate Investment Trusts in Ireland, as provided for in the Finance Act 2013, I have agreed with my cabinet colleague, Minister Shatter, to propose the addition of REIT investments to the 5 investment options already in place under the Immigrant Investor Programme launched last year by the Department of Justice. This would be subject to conditions placed on the minimum level of the investment and withdrawal of funds, to ensure alignment with the overall purpose of the programme.
NAMA is delivering and is committed to delivering additional significant investment in the Irish economy right now. NAMA expects to have approved €2 billion in funding for Irish projects between 2011 and 2015. This level of investment could be increased depending on the pace of economic recovery. The investment will include the construction of 4,500 new houses and apartments in Dublin, in addition to much-needed office accommodation in the city centre and investment in commercially viable retail projects.
NAMA is also willing to make €2 billion in vendor capital available to purchasers of commercial properties in Ireland. It has already lent €375 million of this across six major transactions.