Re­duc­ing cap­i­tal gains tax could ease hous­ing pains

Sunday Independent (Ireland) - Property - - SUNDAY PROPERTY - 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. AI­DAN DAVITT

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.

‘If CGT were re­duced to 10pc on a one-year ba­sis it would help fa­cil­i­tate those wish­ing to dis­pose of va­cant prop­er­ties’

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.

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