Paul Gavan (Sinn Fein) | Oireachtas source

I want to speak to recommendation No. 13 in particular which, as Senator Higgins stated, is similar to her recommendation. I have tabled a number of recommendations calling for reports into the tax treatment of REITs and IREFs and the broader economic impact of institutional investment in the housing market.

I want to begin with the tax treatment of REITs and IREFs and the application of capital gains tax. Investment funds in the housing market pay no capital gains tax on disposal of their assets. We have just heard an interesting contribution from Senator McDowell, who argued for a lowering of the rate to 20%. I disagree with him. I am sure he will be relieved to hear that as well. We are talking about investment funds paying zero capital gains tax on the disposal of their assets. When property or land is sold at a profit it is normal practice that it is subject to capital gains tax at 33%, which is payable within a few months of disposal. This applies to individuals and companies, including large developers such as Glenveagh and Cairn Homes, but REITs and IREFs are exempt.This exemption is a massive and unjustified benefit for funds to keep accumulating money within a fund, tax free, with none of these gains subject to dividend withholding tax unless the money leaves the fund. It is striking that we have these outrageous tax reliefs for REITs and IREFs that Fianna Fáil and Fine Gael want to defend, while those parties have just voted against giving a tax break to ordinary renters. That is some contrast.

I will provide two examples. Last year, Kennedy Wilson sold one of its key Irish properties, Baggot Plaza in Dublin, for €141 million to a German property investor at a profit of $85 million, with these gains exempt from capital gains tax, CGT. Kennedy Wilson made clear that these proceeds, exempt from CGT, would be "recycled into new opportunities", which is a tax advantage not available to struggling homebuyers, small landlords or any other company. Yes, I used the word "landlord" but, hopefully, the Minister will approve. Similarly, last year, IRES REIT sold an 151-apartment portfolio to Orange Capital for €48 million. Again, this was a sale that was exempt from capital gains tax. If we are to rebalance our housing system, one that is out of control and failing in the delivery of affordable homes for purchase and rent, we must examine and remove the generous tax advantages that have been gifted to funds by this Government, including capital gains tax.