Budget 2018, announced on 10th October 2017, has made a number of changes that may have an impact on anyone in the business of commercial property. The changes are primarily taxation based.
Stamp Duty Changes
The rate of stamp duty on non-residential property increased from 2% to 6% on 11th October 2017. Stamp duty on non-residential property was lowered from 9% to 2% in 2011 to stimulate the commercial property market and now that the market is again performing well, it was felt justified to raise it once more, albeit not to the same degree as before.
It is the conveyance of the property and not the contract that is the chargeable instrument for stamp duty purposes. As such, any conveyance of commercial property executed on or after 11th October 2017 is subject to the new rate of stamp duty.
There are, however, transitional measures for contracts executed but not yet completed on or before 11th October 2017. Some additional time will be given to complete the conveyances and avail of the pre-Budget 2% stamp duty rate.
Capital Gains Tax Relief Changes
This is a relief from CGT in respect of land or buildings which were purchased in the EEA (European Economic Area) area between 7th December 2011 and 31st December 2014. The Budget has reduced the length of time owners must retain qualifying assets in order to enjoy relief from Capital Gains Tax from seven years to four years. It is intended that this will reduce any impact it may have on limiting the supply of development land available for sale. If owned for more than seven years, a tapered relief will apply. The new CGT relief measures will apply for disposals made on or after 1st January 2018.
The Vacant Sites Levy rate is to increase to 7% in the second and subsequent years, meaning if the owner does not develop the land in 2018 they will pay 3% in 2019 and will then be liable to pay 7% from 1st January 2019.
Changes involving Agricultural Land for Solar Panels
The Budget also provides for the leasing of agricultural land for solar panels to qualify as agricultural activity for the purpose of Capital Acquisition Tax and Capital Gains Tax reliefs. The initiative will be operating where solar panels cover no more than 50% of the land and is intended to support diversification and renewable energy and help tackle climate change.