Man who hoped to make €2m from selling homes to 'big spenders' left with €61k tax bill

He expected to achieve a €500,000 profit on the first house, which would enable him to build the second, and so on, the Tax Appeals Commission heard

The man failed in his appeal at the Tax Appeals Commission against a Revenue Commissioners assessment of €61,281. File photo 

A taxpayer who said that he once expected to make a profit of €2m from building and ‘flipping’ a few houses to ‘big spenders’ on a 4.5-acre site in the countryside has been left with a tax bill of €61,281.

This follows the man failing in his appeal at the Tax Appeals Commission (TAC) against a Revenue Commissioners assessment of €61,281.

The man purchased the 4.5-acre site for €330,000 funded by way of a loan in 2005 and claimed trading losses of €168,120 from 2008 to 2015.

However, Revenue disallowed the losses after concluding that the man was not carrying on any trade to qualify for trading losses and now Appeal Commissioner, Simon Noone, has upheld the Revenue assessment.

In his findings, Mr Noone concluded that “the appellant’s claim for trading losses on his income tax returns was based on the incorrect and inaccurate basis that he had been engaged in trade”.

Evidence

In evidence at the TAC, the man said he purchased the site with a view to building and “flipping” a few houses.

At the TAC hearing he said that he believed it would be attractive to “big spenders” and he anticipated achieving a €500,000 profit on the first house, which would enable him to build the second, and so on and he expected total profit of around €2m.

He said that there was a good chance of three to five houses, with a possibility of more.

The appellant stated that he did not buy the site to build a house for himself and stated that the current status of the site was that “it’s still there".

He did not register for VAT because “I figured nothing had happened yet”. When it was put to the appellant in cross-examination at hearing that he abandoned his plans in 2007 to develop the land, he stated that “the plans abandoned me…the environment changed,” referring to the property crash.

Ruling

However, Mr Noone found that the evidence suggests a distinct lack of urgency on the part of the appellant to progress the development of the site. Mr Noone said that he was satisfied that the appellant never intended to engage in the trade of land development.

Mr Noone said that prior to 2005, the appellant had no experience in the trade of land development; did not obtain funding to build the homes; never applied for planning permission for the homes and the agricultural land remains zoned as agricultural lands.

The appellant still owns the site and he has built stables on the site. Counsel for Revenue stated that “the lack of any application for planning permission was indicative of the fact that there was no intention to trade”.