irish tax loophole insanity

Each week we are treated to new revelations as to how the wealthy dodged taxes in the celtic boom.  Here are just a few that I learned about from today’s papers.

1.  Stamp Duty Avoidance by Developers.  There was a mechanism called ‘resting on contract’ used as a vehicle to avoid stamp tax on property purchases.  Many developers were able to avoid this tax by never taking title to the property despite paying for the asset.  Seemingly, even local authorities used the loophole.

This is apparently proving to be a major issue in relation to Nama.  The banks have the assets as collateral but exactly what happens in a default scenario if the title is still registered in the name of the former owner?? Very tricky.  I see lawyers getting very rich on this one!! Once again, we taxpayers were conned.

2.  Capital Gains Tax Loophole.  Wow, this really shocked me as the transaction is so simple that it is hard to believe that it existed.  Here is how it worked.  A Capital Loss needed to be created to offset Capital Gains.  To do this, you would simultaneously purchase and sell Irish Gilt futures.  The transaction would generate a profit and a loss for the same amount.  The profit would be free of CGT but you could claim a tax break for the losses.  You could then use the losses against any capital gain,  property purchase or whatever.  Simple!   I wonder how much the exchequer lost on that.

3. Section 482 Relief available to passive investors has been closed off.  These investors put money into section 482 buildings and gardens.  Taxpayers – If you want an example of where your  tax money went under this scheme, just check out the state of Dunboy Castle near Castletown Bere.  Millions squandered with no hope whatsoever of a recovery.

Yes, we all know it – we taxpayers have been well and truly had!!

posted by Catherine FitzMaurice, Kilbrogan House, Bed and Breakfast

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