NAMA WINDFALL DEVELOPMENT TAX PLANS UNWORKABLE
Property consultants CB Richard Ellis today came out to question Government proposals to impose an 80% windfall tax on land re-zonings under the forthcoming NAMA legislation.
According to Ronan Webster, Director in the Development Department at CB Richard Ellis, “While no one is denying the need to curb land speculation and counteract the extent of rezoning that has occurred in local authority areas across the country over the last few years, this proposal to tax all land re-zonings at such an exorbitant rate has not been fully thought out and is going to prove unworkable in practice. We therefore urge the Government to rethink this element of the NAMA legislation”.
While the property consultants say that the proposal to increase the rate of capital gains tax on development land from 20% to 80% is largely irrelevant in the current market, with only very rare instances of land likely to be rezoned for the foreseeable future, this move will potentially have very significant implications for developers in the medium to long term. In the short term however, CBRE say that the measure will impact significantly on land valuations. According to CBRE, the property industry is already grappling with preparing accurate valuations for development land that is transferring into NAMA against a backdrop of virtually no transactional evidence and this proposal is going to make this process even more difficult. It will have particularly severe value implications for un-zoned land.
Guy Hollis, Managing Director at CB Richard Ellis said, “Initially, we understood that only un-zoned land that was being rezoned for a higher value use would be subject to this 80% tax. Now after last weeks Seanad debate on NAMA, we understand that this clause has been amended to include all upgrades of re-zoning in development plans. Essentially this means that land with higher value zonings such as residential or town centre zonings have a clear advantage over other zonings such as industrial zonings which will effectively be penalised if their land zoning is upgraded. This will have huge implications for the market and for land valuations. Just like the much discussed property tax, the property industry generally don’t dispute the need to increase the rate of capital gains tax on land but we urge the Government to spend some time putting a workable solution together rather than rushing to implement a regime that will prove unworkable and could potentially be challenged on constitutional grounds”.
For Further Information please contact
Director – Research Department
CB Richard Ellis
Director – Development Department
CB Richard Ellis
Tel 00 353 1 6185556
CB Richard Ellis
Tel 00 353 1 6185500
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company three years in a row and a Fortune 100 fastest growing company two years in a row. Please visit our Web site at www.cbre.com.
In Ireland, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 110 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2009, for the fifth year running. Please visit our website at www.cbre.ie