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New Property Tax For Ireland...

Property tax: how will it work...

Homeowners will have to fork out hundreds every year if the Government presses ahead with plans to introduce a new property tax...

THE prospect of a property tax is looming large as the Government attempts to plug holes in the Exchequer finances.

An annual tax based on the value and size of the property is what is being considered, it is understood.

Taoiseach Brian Cowen said in the Dail last week that no decision had been made on the tax measure, but he did not rule out introducing the new tax either.

The tax would be self-assessed. This would likely mean homeowners having to get their home professionally valued so they could make an accurate assessment of its worth.

For a lower-valued house, homeowners would pay around €250 a year, while those with a pricier house in a sought-after area would pay more than €3,000 a year.

However, any move to introduce a property tax is set to be hugely unpopular and may even be resisted, if calls and texts from homeowners to radio stations are anything to go by.

So how might such a tax work?

The Commission on Taxation report, which was issued last September, recommended that the tax should apply to residential properties, second homes and holiday homes, which means it would replace the €200 levy imposed by local authorities.

The owners of residential housing that is rented out would also have to pay the tax.

Commission recommendations would see the tax applied to vacant housing units as well.

The report said self-assessment was an appropriate way of determining what level the tax was set at.

It is understood that self-assessment would involve homeowners getting professionals to value their properties. The commission recommends that homeowners would get a tax credit of €75 in the first year to compensate for the cost of a valuation.

Property owners could make payments due to their local authorities, as is the case with the second-home tax.

Bands

It is understood that the Government is looking at applying a tax rate of 0.3pc to houses in different valuation bands, which was one of two options presented by the commission. This would mean that houses valued up to €150,000 would generate a tax of €225 a year.

Houses valued at between €150,001 and €300,000 would be charged €675.

This is the valuation band that applies to the majority of houses, according to housing statistics.

For houses valued between €300,001 and €450,000, the annual tax would be €1,125, while a a tax of €1,575 would apply to houses valued at between €450,001 and €600,000. Houses worth between €1m and €1.5m would be taxed at €3,750.

Stamp duty

Many people who bought houses during the housing boom paid huge amounts of stamp duty.

This tax did not apply to new homes at the time, but someone who bought a second-hand house for €300,000 would have paid €15,000 in stamp duty between 2004 and 2007. Stamp duty rates have since come down. The commission recommended that there should be no stamp duty at all on the purchase of a home.

It also recommended that house-buyers who have already paid stamp duty will be exempt from the property tax on their main residence for seven years.

Exemptions

People on low incomes, the jobless and those with disabilities will not have to pay the tax under the plans being considered by the Government. Social and affordable houses and nursing homes are also likely to be exempt.

Revenues

The commission report says that the annual property tax should be used as a source of local government funding.

An Oireachtas committee heard last week that the introduction of a property tax would have the potential to generate between €1.5bn and €2bn a year for the Exchequer.


Report Charlie Weston - Irish Independent

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