Kevin Humphreys (Dublin South East, Labour)
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Question 97: To ask the Minister for Finance the projected loss to the Exchequer due to the capital gains exemption introduced for the sale of any commercial property that takes place up to 2013 which is not resold for seven years; if the incentive relief will apply in perpetuity, for example, if a property bought in 2012 is not sold for 50 years, whether no capital gains will apply in 2062, and if not, if he will indicate the way the capital gains exempt from tax for the seven year period will be assessed; and if he will make a statement on the matter. [39883/11]

Michael Noonan (Limerick City, Fine Gael)
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The Capital Gains Tax (CGT) initiative I announced in the Budget is a relief from CGT on the disposal of certain property, where that property is bought during the "incentive period" from 7 December 2011 to 31 December 2013 and is held for seven years. The relief will apply to all property, whether residential or non-residential. The relief will not apply if a property is sold within seven years of its acquisition. If it is sold more than seven years after acquisition and a gain is made on the sale, relief will be given for the initial seven year holding period. For example, if the property was bought in January 2012 and sold in January 2022, the property would have been held for ten years, so seven tenths of any gain will be relieved from CGT and three tenths is taxable. If the property is held for 50 years, as per the Deputy's question, seven fiftieths of the gain will relieved from CGT and 43 fiftieths will be taxable.

There will be no cost to the Exchequer from the scheme in the next seven years, because the relief cannot be claimed until a property bought in the incentive period is owned for at least seven years. It is not possible to project how much CGT relief will be given after that date, because the number of cases in which relief can be claimed is dependent on the number of properties purchased within the incentive period, and the relief will vary in every case depending on the value of the property on its disposal and the date of the disposal.

Together with the reduction in the rate of Stamp Duty on non-residential property to 2%, which I also announced in the Budget, the measure is intended to stimulate the property market. While there may be a cost to the measure itself in the long term, the intended stimulus effect should lead to additional employment, activity and revenue to the State from other taxes in the short term.

Full details of the measure will be contained in the Finance Bill.