Who will assess value with it unlikely that full assessments can be done on all dwellings in 12 months, how often (in a falling market very some houses may be assessed in October as 460k but only worth 430k by the time you pay)
And what is the likely effect on the market? Will the be further downwards pressure to get into lower bands or will it just encourage people to keep renting (assuming it takes a few years for the inevitable UK style tenant pay the tax to kick in)
So what if the market is falling ? Your house is with the same relative to the others. this is why wide bands will be problematic
I heard Karl Deeter suggesting it should be based on site value rather than say size to account for train lines and other infrastructure provided by [local] Gov. However I think this kind of logical thinking will get emasculated by political pressure from Dort and Luas beneficiaries.
The article does suggest self assessment, but in the this is going to make it a very clunky process as it is difficult to accurately price a property with the lack of a sufficient sales register (The CSO’s latest Residential Property Price Index does not give average prices but only details percentage decreases based on mortgage information from the country’s leading lenders) and asking prices not consistent with selling prices.
Problem with a falling (16% a year) market is that it will very quickly make valuations (under whichever valuation system) inaccurate, requiring reassessment/appeals from property owners and also meaning that if prices fall a further 16% and houses drop into a lower band then the government will only get around 1 billion rather than the 1.2 suggested. To compensate for this the multiplier would have to be moved from .25% to around .3% possibly further depressing the market.
A property tax is needed but in the rush to get money it seems to be being done poorly. The site value idea seems a better bet, perhaps in the longer term with a component added for capital improved (buildings) value
13.3% ? i would say yes. They are a racing certainty to fall by that. We may see a smaller correction in 2012 perhaps only 9 -10% but we’ll see further drops in 2013 following a horror budget in Dec 2012 when income tax comes back on the table. I would say that in early 2014 prices could have fallen by 20% from where they now.
Here are the kites being flown in the article itself.
It’s a massive incentive to get the average house valued down to 149,999 anyway, which isn’t going to do much for buoyancy in the housing market. Needless to say, when everyone self values downwards in year one, they’ll just hike the rates to hit the targeted income regardless in subsequent years. It will hit a lot of people hard I’m sure, and isn’t it a crying shame this wasn’t brought in in 2001 when it might have spared us the worst effects of the catastrophe?
Why are they going for a straightforward house tax rather than a site valuation tax anyway?
Without a flat rate in order to make it work you would need some kind of government valuation system (possibly a public register) whereby the tax is based on that valuation. This might also help with the whole whats the house worth issue facing many buyers. Although I do cringe as out of work EA’s would be licking their lips at such a prospect.
Self assessment is absolutely unworkable, and quite frankly ridiculous. e.g. I value my damp cottage holiday home in Roscommon at zero, therefore whistle for your tax Mr. Noonon. As usual, they are only doing a half job, as they dont want to do the hard yards needed to levy this tax correctly.
I would prefer a site tax…but if you are going down the road of calculating a tax off the building itself…
I really don’t see the difficulty in calculating this tax, each county council needs to set up about 7 tax bands for 7 types of property.
1 bed apartment pays X
2 bed apartment pays X
3+bed apartment pays X
2 bed house pays X
3 bed house pays X
4 bed house pays X
5+ bed house pays X
Each county council knows how much they need to raise, they then need to figure out what housing stock they have in their borough. Then they need to set the rates for each band so they end up with the necessary revenue. Anyone who refuses to pay gets a charge set against the house, so when it’s sold the tax authorities have to be made good before the sale is completed.
Base it on the numbers of windows I say, that sounds fair. … rabble rousing. But is it really 1696 all over again ? Are Fine Gael really channeling King Billy ?
The Property Tax debates keep throwing up the historic payments of Stamp Duty that were made during the worst of the bubble. Certain vested interests would like the new tax to take into account these historic payments and so reduce the burden on them, but the following quote shows another very valid point of view.
It seems that pinsters have some interesting and (if properly developed) potentially valid ideas about property tax - and also some fears and concerns about its design, implementation, or feasibility.
Why not get your heads together and make a submission to the expert group that is being formed? There are some good brains here.
“…LVT is often said to be justified for economic reasons because if it is implemented properly, it will not deter production, distort market mechanisms or otherwise create deadweight losses the way other taxes do…”
If they do go ahead with this disastrous idea (rather than a site valuation tax) it will be interesting to see how quickly the market corrects, particularly the leafier suburbs of Dublin which have held up compared to the rest of the country.
I’d seriously expect 4 beds in decent Dublin suburbs to drop to 400-450k overnight, rather than the current 600-750k.
€938 tax versus €1699
Average 3 bed houses and apartments would drop to < 150k for the €188 rate.
Most of the country would bar the major cities would drop < 150k also.
Leafier Dublin suburbs would be 150k - 300k for a 3 bed for the €563 rate.
Should have the positive effect of OAP’s trading down, freeing up bigger houses for families at affordable prices.
In the US where local property taxes vary considerably and can be very high in some locations - close to the same as your mortgage over the life of the property, high property taxes results in higher property turnovers rates. Once owners have stopped earning or no longer benefit directly from the consequences of such high taxes in the form of good schools, they sell and move on.
Such an intervention in the operation of the property market would certainly change buying and selling patterns. But one consequence of any such disruption is a reduction in overall levels of activity, especially from buyers.
However, the story planted in today’s media from Big Phil Cunt is just some scare-mongering nonsense to make the flat-rate charge seem acceptable and to reduce objections.
Can you imaging the public service successfully completing a programme of work involving creating a definitive property register, defining a valuation model, valuing properties, handling queries and appeals, correcting errors, implementing billing systems, call centres to handle queries, errors with billing, resolving problems, chasing payments, handling exemptions, etc. in a year?
I could imagine this but then I would wake up from the dream.
“Under the commission’s proposed scheme a charge of
€188 would be paid on houses valued at up to €150,000;
€563 on houses between €150,000 and €300,000;
€938 on houses up to €450,000;
€1,313 on houses valued at up to €600,000;
€1,699 on houses up to €750,000;
€2,188 on houses valued at up to €1 million;
€3,125 on houses up to €1.5 million and 0.25 per cent of the valuation on houses over that.”
So if your planning on never selling your house or moving out like my grandparents/parents for example, then what is stopping them getting a really low valuation just to be in a lower tax band?
If they don’t plan on selling their house who cares what the valuation is? It’ll become the same as the BER rating €100 on the kitchen table for the valuer to say your house is worth XY and Z!
Hey presto anyone who was thinking of buying a house in Ireland… has one more negative against doing so!
