NAMA PAY DEAL
Developers are still sitting pretty according to reports in a couple of the papers. “Builders get Nama pay deal” in The Sunday Times reports that the top 10 developers – who owe billions to the state and whose assets have transferred to Nama – will be allowed to pay themselves up to €200,000 salary a year and hold on to their homes while their property assets are worked out over the next five to 10 years. If there are profits remaining in any of these assets, the state agency will also share it with developers who reach certain performance targets.
However, Nama has told developers who sign up for the deal that the agency will take the first charge on their family home and that they must give up their pensions and other assets to free up capital now to fund their development businesses. If they reach their targets then their homes will be protected. If not, they must forfeit them voluntarily to the agency rather than tying them up in the courts. Nama says plans show that all the developers have already cut their salaries by 50% to 75% and significantly reduced overheads.
That’s not all. The Sunday Business Post reports that developers with Nama-bound loans are claiming tax deductions on interest payments even though they are not making payments to their banks. Using this loophole could create a double-hit for the taxpayer. If the developer’s loan is from a bank now owned by the state, such as Anglo Irish Bank or Irish Nationwide back thanks to a loophole allowing them to claim back mortagge interest payments – even if they are not paying the mortgage at all. Tax legislation allows for a deduction if the interest is charged on a loan.