• Existing upward only rent reviews are confirmed;
  • 2% stamp duty on commercial real estate from 6 December, 2011; and,
  • For properties acquired by end 2013 and held for at least 7 years, no capital gains tax will accrue on gains made during the 7 year period.

The Irish Government, as part of its Budget 2012, has announced:

Upward Only Rent Reviews

In the face of a collapse in rental values, particularly in the retail sector, the Government had committed to legislate to remove upward only rent reviews in leases created prior to March 2010.

The Government has confirmed that it is not possible to interfere with existing lease contracts due to constitutional constraints.

This confirmation brings certainty to the issue and will be welcomed in the investment market.

Upward only rent reviews are prohibited in leases created after February, 2010.

Stamp Duty

Multiple stamp duty rates for non-residential properties are replaced with a single rate of 2% in respect of instruments executed after 6 December, 2011. The previous maximum rate of 6% was chargeable for any property valued at more than €80,000.

This is a major reduction in transaction costs.

The theoretical costs to be netted from property valuations immediately moves from 8.42% to 4.42%.

Capital Gains Tax

A new incentive relief has been introduced. For properties acquired after 6 December, 2011 and before 31 December, 2013 and held for more than seven years, 100% relief will be given against any capital gains tax arising on the gains accrued in capital value in that seven year period.

The current rate of capital gains tax of 25% increases to 30% in respect of disposals made after 6 December, 2011.

Real Estate Investment Trusts

There was no direct mention of REITs, the introduction of which is favourably anticipated by the market.

It is hoped that the Government's expressed intention to introduce a package of measures in the Finance Bill in support of the continued success of the international funds industry covers the issue.

Finance Bill

The Finance Bill, which will confirm the detail of these provisions, will be published early in 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.