Cowen praised for phasing out tax reliefs

PROPERTY investors got a soft landing yesterday with a three-year phased removal of tax reliefs, instead of them being axed next July as previously expected.

Investors can also expect a surge in demand for crèche spaces following yesterday’s Budget. That was one of the upbeat assessments last night of Finance Minister Brian Cowen’s property-neutral Budget 2006.

“Crèche facilities are included in almost all mixed-use schemes being developed in Ireland. The Budget will further boost demand for these crèche facilities and improve the sustainability of many mixed-use developments across Ireland,” said Marie Hunt, of CBRE Gunne property advisers.

Most commentators praised Mr Cowen for opting to phase out the removal of tax reliefs over three years, instead of closing them all next summer.

Ending tax relief schemes will save the Exchequer hundreds of millions of euro, but the effects won’t be seen until 2012 when most reliefs have been claimed, said Mr Cowen.

Transitional measures are being put in place for developments in the pipeline: the date for 100% reliefs is being extended by five months to the end of 2006, dropping to 75% in 2007 and to 50% for expenditure incurred to end-July 2008.

It will add to safety on building sites, “enabling projects to be completed in an orderly and therefore a safe manner”, noted Alan Cooke of the Irish Auctioneers and Valuers Institute.

“Many developers are working flat-out to meet the July 2006 deadline, which was proving for many to be unrealistic given delays in the planning system and the limited time scale allowed for construction,” agreed economist Geoff Tucker of Hooke & MacDonald.

“These transitional arrangements will facilitate many schemes that would not have been built to come forward over the next two-and-a-half years.”

Tax incentive schemes are being retained for services including nursing homes, private hospitals and childcare facilities.

However, the flight of Irish investment funds overseas will continue because the punitive 9% stamp duty rate remains, commentators pointed out.