Reducing capital gains tax could ease housing pains
The latest information made available by the Central Statistics Office shows there are in the region of 250,000 vacant properties in the country, of which 100,000 are located in cities and surrounding counties.
Most of these vacant properties are in desirable locations where people want to live, such as south inner-city Dublin. If we could bring even just a fraction of these properties back on to the market, it would go a long way in helping to solve our housing crisis.
With that end in mind, this week in the Seanad I called on Housing Minister Simon Coveney to consider introducing a temporary reduction to capital gains tax (CGT) to help tackle the growing housing crisis as part of the upcoming vacant housing strategy.
Currently, many people are holding off selling their vacant properties due to capital gains tax, which stands at 33pc. If this tax were to be reduced to 10pc on a one-year basis it would help facilitate those who want to dispose of vacant properties. Previous examples of reductions in CGT have shown us that it could facilitate the sale of up to an additional 15,000 properties.
In turn, many of these properties would enter the rental market, helping to stem the rise of rental inflation. Many more would be used as owner-occupier homes which would also alleviate the rental crisis by taking prospective first-time buyers out of the rental market, while also increasing the number of available homes.
There would, I believe, be an immediate response to a reduction in CGT. The key would be to ensure that the reduction has a limited time frame, which would send a signal to those who are looking to sell vacant properties that now is an opportune time to do so.
It's simply not acceptable that we have 250,000 vacant properties in Ireland during a time of national housing crisis. Every effort must be taken to return some of these properties to the market.
This measure alone will not solve the housing crisis but it would certainly help to alleviate it.
- Senator Aidan Davitt is managing director of Sherry FitzGerald Davitt and Davitt, Mullingar. He is also Fianna Fail spokesperson on jobs, enterprise and innovation in the Seanad.