The recent Finance Bill has made provision for the establishment of real estate investment trusts (Reits), which are designed to attract foreign capital into the Irish property market. The Reits will be listed companies exempt from corporation tax on qualifying income, and capital gains tax related to rental investment property.
At least 75 per cent of the income of the Reit will have to be derived from property rental and each vehicle will be required to have a minimum of three properties on its books. The Reit will be required to distribute to shareholders “at least” 85 per cent of its income each year, subject to it having sufficient distributable reserves. This will be by way of a property income dividend. It is also hopeful that an “IFSC hub” for Reits might be established for investment across Europe.
Gerard O’Toole, Director of Tuohy O’Toole commented, “REIT’s are an established property investment method across Europe, the US and Asia and can offer investors considerable advantages over more traditional investments. The property sector has called for their introduction for some time and this announcement is to be welcomed. One hopes that such an initiative might help to stimulate a beleaguered property sector and indeed Ireland could establish itself in time as one of the main centre's of REIT investments. There is a large volume of distressed property in Ireland that with some creative thinking could in part be concerted to REIT’s”