The real estate sector will shortly be affected by a number of tax changes, most of which will take effect from 1 January 2012.
These include:
- A new transfer tax exemption on intra-group transfers of real estate has come into force. This will only apply if the purchaser’s main activity is the sale and purchase of real estate, or the letting of own real estate. Indirect intra-group purchases will continue to benefit from an exemption without these additional conditions.
- A waiver of penalties is available to certain companies that have taken advantage of optional transfer tax benefits. It applies to those who were granted an extension, under the 2009 anti-crisis rules, of the deadline by which they either had to erect residential property on their plots or re-sell real estate. They can now apply by 31 March 2012 for a final waiver of the penalties they would otherwise have faced for missing the extended deadline, which will also allow them to pay transfer tax at the normal rates in force when their new request is made, rather than the higher rate that applied to most of them when they originally opted for the benefit.
- Income originating from a non-REIT related party of a REIT will no longer benefit from a corporate income tax exemption.
- Capital gains from non-agricultural land that used to be agricultural land at any time within the previous five years will be subject to a special tax with an interest-element. The amount of tax payable will be inversely proportionate to the time elapsing from the date of requalification. This tax will apply to companies as well as to individuals, and to directly or indirectly held real estate.
- The taxable area for local land tax purposes will be subject to fewer exceptions.
These changes appear in the 2012 tax amending Act that has recently been published in the Official Gazette.
