Developers face 100pc tax hike on land profits
Those developers who can still earn a profit from selling housing development land are faced with a doubling of the tax on their profits. Prior to the Budget they would have paid tax at only 20pc. From now on they could pay tax at up to 50pc, including income tax and levies.
Meanwhile Brian Lenihan has also signalled that he plans to curtail a tax avoidance measure which allowed developers to reduce the tax they paid on other profits by offsetting losses from land sales. The two moves are expected to generate €20m in extra taxes this year and €70m in a full year.
However even some of those taking profits could reduce the tax on the profits to 25pc if the sale was done by a company. These changes will apply to income tax for the year of assessment 2009 and onwards and on corporation tax for accounting periods ending on or after January 1 this year.
Claims
Those seeking to offset losses from such development land must have made their claims before yesterday.
Les Barrett, partner in Grant Thornton's Limerick office, pointed out that Charlie McCreevy introduced the low tax rate on these land profits to encourage those who had been hoarding land to sell it.
He also pointed out that the Finance Bill is expected to explain how the land traders may be curtailed in using losses to shelter other income.
The termination of accelerated capital allowances for private hospitals and nursing homes will discourage investors from investing in these facilities.
Mr Lenihan, who expects to save €60m in a full year, said that transitional arrangements will be put in place for projects that are at an advanced stage of development.
Housing developers with a stock of family homes can also expect to benefit from the new stamp duty holiday when they take trade-ins against new homes they sell to existing home owners.
These developers will not pay stamp duty on the second-hand homes they purchase until they sell them on.
- Donal Buckley
