While Tuesday’s Budget mainly focused on the end of austerity, there were a number of measures implemented that will have an impact on the property market in the next year.
Amongst the main points were:
• Refund on DIRT on savings for first time buyers
• €2.2 billion investment in social houses
• Increase in homelessness fund to €55.5m
• Home Renovation Incentive extended to include landlords of rental properties
• Confirmation of removal of capital gains tax relief
• Removal of 80% windfall tax on profits on sale of development land
• Living City Initiative to regenerate residential buildings built prior to 1915 in eligible areas
• Rent-a-Room Relief increased by €2,000
Refund of DIRT for first time buyers
To support first time buyers saving for a home, the Budget will introduce a refund on Depost Interest Retention Tax (DIRT) on savings used to purchase the property.
This refund came into force from last night and will run until the end of 2017 in respect of savings up to a maximum of 20% of the purchase price. As a result, first time buyers will be able to save for their first home and retain 100% of the interest that they earn on their savings.
€2.2 billion investment in social housing
In terms of spending, there will be a €2.2 billion investment in social housing, with over 7,500 new homes expected to be provided under a range of housing initiatives in 2015.
Increase in homelessness fund
A further €10.5 million was also set aside towards dealing with the problem of homelessness, bringing the total spend for 2015 to €55.5m.
Home Renovation Incentive extended
For the existing homeowner the big news was that the Home Renovation Incentive will be retained, with the scheme extended to landlords who wish to renovate their rental properties.
This kicked in at midnight last night and will run through until the end of 2015.
Minister Noonan said he “would expect that the savings realised under this scheme will be reflected in rent levels.”
Removal of seven year capital gains tax exemption
The removal of the capital gains tax relief introduced to incentivise the purchase of property between December 7th 2011 and the end of this year was also confirmed.
Minister Noonan said: “It has achieved its objective of increasing property transactions and is no longer needed.”
Abolition of windfall tax
Budget 2015 has also removed, with effect from January 1st 2015, the 80% windfall tax applying to profits generated through the sale of development land. The 33% rate of capital gains tax and other standard taxation arrangements will now apply to the property market as it does to other normal functioning capital asset markets.
Living City Initiative introduced
Meanwhile, the Living City Initiative was introduced aimed at regenerating retail and commercial districts and encouraging families to live in historic buildings in six cities. Still subject to European Commission approval, it is hoped that the local authorities in Dublin, Cork, Limerick, Waterford, Galway and Kilkenny will be in a position to suggest final proposals before the end of the year with a full rollout of the initiative early next year.
The relief is intended to include regeneration works on any residential buildings built prior to 1915.
Elsewhere, the threshold for exempt income under the Rent-a-Room Scheme was increased to €12,000 per annum from the current amount of €10,000.
Review of zoned land
A review will also be launched to see if the owners of zoned land were waiting for prices to rise further before they begin development.
If that proved to be the case, Mr Noonan said the Government would examine measures that would penalise those who do so.
However Mr Noonan also warned that the State could not return to a situation where tax incentives for developers drove supply.
“The Government is doing its part to overcome the challenges and remove the roadblocks to a fully functioning property market,” he said.
“It is up to the other stakeholders to follow suit.”