Sinn Féin warns against capital gains tax on family homes

An opposition TD has warned Government not to impose a potential capital gains tax on family homes, saying officials are unfairly targeting ordinary people instead of vulture and property funds to address Ireland’s property crisis.

Sinn Féin finance spokesman Pearse Doherty issued the warning after it emerged the Department of Finance is considering the imposition of the new tax on family homes when the properties are sold or passed on to owners’ children.

Briefing documents currently being reviewed by the department’s tax strategy group show that officials are examining whether to make the tax move in October’s upcoming budget.

The potential plan, which has not been signed off on and remains only under consideration, would involve removing the relief on family homes from capital gains tax or only allowing the relief to continue up to an agreed financial limit.

The move would ensure additional money is brought into the exchequer from the sales and would, in theory, also help to speed up the sale of larger family homes by individuals keen to avoid significant taxes on their properties — helping to address the current housing crisis.

However, it would also prove to be deeply unpopular among older people who have paid off their mortgages and younger generations, meaning it is far from clear whether Finance Minister Paschal Donohoe will risk introducing the proposed policy.

Pearse Doherty said the Government is targeting the “wrong” groups in addressing the housing crisis and that if it wants to introduce new taxes they should be on property and vulture funds.

He said the department’s strategy paper is “misplaced at a time when there is a glaring policy gap allowing property funds to avoid capital gains tax” and that individual families should not be made to suffer for the current situation.

While opposition parties are opposed to the capital gains tax suggestion, business group ISME said in recent days that it would be in favour of such a move.

In a pre-budget submission released at the start of this week, ISME chief executive Neil McDonnell said the potential policy should be considered.

In addition to calls for infrastructure spending to increase and further help business start-up and entrepreneurs, Mr McDonnell said “our capital gains tax and inheritance tax regimes must be updated, both to increase yield and to encourage more intensive use of assets”.