The Irish government has responded to a slowing housing market by cutting the tax paid on house sales in its 2008 budget report published yesterday.
It said stamp duty tax on house sales would be cut to 7% from 9% for houses under €1m (£720m) as evidence emerges of slowing house building and falling house prices. CB Richard Ellis said new house completions had reduced by as much as 30% this year because of weak sentiment. First time buyers will remain exempt under the new regime.
Highly progressive
Irish finance minister Brian Cowen said the tax changes were ‘highly progressive as those buying the more expensive houses will always pay a higher effective rate than those buying your average house’.
The government however made no changes on stamp duty on commercial property deals which remains high with a flat rate of 9%.
Lost opportunity
Marie Hunt, director of research at CBRE, said: ‘The rate of stamp duty on commercial property transactions in this country remains prohibitively expensive...As a result, Ireland is the only country in the EU with no cross-border property investment and of the €12bn (£8.7bn) that will be invested by Irish investors in commercial property in 2007, €10bn (£7.2bn) will be invested outside of the domestic economy. This is a lost opportunity.’
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