Companies and individuals selling residential land will be allowed to pay tax at the lower 20 per cent capital gains tax rate, rather than at the appropriate rate of corporate or personal income tax, Mr McCreevy said in the Budget yesterday. "I am introducing this incentive rate for such situations in order to increase the supply of land for housing," he told the Dail.
Under the provision, the corporation tax rate for companies whose profits from the sale of residential land would otherwise be at 25 per cent, will be reduced in the case of these profits to 20 per cent. This will come into effect from January 1st, 2000.
"The taxable profits from the sale of any residential land will be ring-fenced and taxed at a special rate of 20 per cent," the Minister said. "There will be no offset for personal allowances or credits in the case of this rate, but the individual may retain the option of having the profits charged to tax on the basis that has applied up to now."
This change will apply from yesterday, December 1st, Mr McCreevy said, and will use the same definition of residential land as that used for the purposes of the 20 per cent capital gains tax rate.