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Rent tax free for 2 years - developments named

Rent tax free for 2 years - developments named Image
The Income Tax Office has confirmed to Chestertons the developments which will benefit from two years of tax free rental income.
 
In July 2016, shortly after the referendum, the Chief Minister stated in Gibraltar Parliament the day after the budget speech:
 
"I want to announce a new measure as a result of meetings I held this week after coming to this house and the very positive progress that I believe there will be in the market to build homes for key workers in Gibraltar sooner than I expected. So, therefore, I announce a new budget measure today that where any property is constructed in the next thirty months from the 1st July 2016 [to 31 Dec 2018] and that property is rented for residential purposes, the owner of that property will receive a tax credit equal to the tax payable on the profits earned on the first twenty-four months of rent occurring in the first five years after the completion of construction of that property. The tax credit is not refundable and can be offset against the tax payable to extinguish any liability to tax."
 
The intention at the time was to encourage developers to develop property, despite the referendum result which some expected could have caused an implosion in the property development sector, to house the expected influx of key workers should there be a border issue.
 
Developers took note and the tax incentive was used by developers in their marketing to attract off-plan investors who are crucial to any property development gaining bank funding and hence having a viable project.
 
We queried with the Income Tax Office the definition of "constructed" and received the following reply in February 2018.
 
We can confirm that if a property is constructed in the next thirty months from the 1st July 2016 to 31 Dec 2018 and that property is rented for residential purposes, the owner of that property will receive a tax credit equal to the tax payable on the profits earned on the first twenty-four months of rent occurring in the first five years after the completion of construction of that property. The tax credit will not be refundable and can be offset against the tax payable to extinguish any liability to tax. Note that this will be available to construction projects that commence between 1st July 2016 and 31st December 2018.
 
The tax credit has now been incorporated in the Income Tax Act Schedule 3 clause 17B.
 
The list of developments confirmed to us in August 2019 by the Tax Office as qualifying for the tax credit are stated below:
  
 
These developments were constructed or construction commenced between 1st July 2016 and 31st December 2018.
 
This is great news for existing investors in these developments or those seeking to purchase an off-plan property in Gibraltar.
 
This list is not necessarily exhaustive and we believe other developers may wish to make their own representations to the Tax Office.
 
Our related party Buckingham Corporate Services is qualified to give Gibraltar tax advice.  Please email info@bcs.gi.

Contributed by Mike Nicholls