I heard a mention about a property tax proposed by the ESRI on the Radio 1 news. Anyone have any info?
I wonder what BOC, Canny and Savvy would have to say about that. You might regret spouting on about your 25 properties at the last BBQ.
A new tax to replace stamp duty. rte.ie/business/2008/0718/nesc.html
Stating the obvious here:
‘Stamp duty is a levee on transactions. But when property sales decline, as is happening now, it hits the Exchequer.’
They can start taxing the empties and multiple owners.
Property Tax fan here. Stamp duty massively inhibits mobility.
The people who gained most from the Bubble (ie property owners) are the ones who need to dig deeper now that the wheels have come off.
Abolish SD and replace it with Property Tax +1
IMHO, it could be a major boost, over the long term, for the Irish property market.
However, you’d have to pause moementairly to acknowledge all those who where double whammied by having paid SD on the value of their transaction and were then being taxed on the value of their house.
Oh well, no one said property ownership wasn’t risky, no, wait, strike that, on mature recollection, plenty of “them that know” said it.
Blue Horseshoe
One minor detail I dislike about property tax.
If you buy say in a more rundown and cheaper part of town.
Through no fault of your own (or possibly because of your own endeavours) your area becomes fashionable/well to do.
Tax rates go up and and now you can’t afford to remain there and off you go to the latest run down part of town to start again.
How is this problem circumnavigated?
It should be very simple to phase this in without double taxing people.
Just stop charging stamp duty now, and charge property tax on any house bought from this point forward.
Then, for anyone who already own a house make sure they get at least 10 years tax free, or whatever number of years works. So if you bought more than 10 years ago it’s time to start paying, if you bought less than 10 years ago, you get to run out the rest of the years before you start paying.
This has me worried if it’s the motive because it suggests that when house prices fall the exchequer will still want the same amount of tax.
To work, property tax has to be based on the value of the property, and for that we need a transparent publically available record of house price transactions.
IN that ‘Stamp duty is a levee on transactions. But when property sales decline, as is happening now, it hits the Exchequer.’
When you do it right property tax should encourage people to live an a house appropriate to their needs, or pay to live somewhere bigger. It should hammer home to people that having a home bigger than you need is a liability not an asset. it should stop the hoarding of empty properties.
I fear that the lazy Irish way of doing this will be simple a tax that’s decided on by the local authority, based on something like square footage.
It will be introduced at a relatively low level but will ramp up very quickly, and will never fall when house prices fall.
I’m in favour of a property tax as opposed to stamp duty, even though I know it would cost me more in the long run. Unfortunately I think we all know this will be handled in a ham fisted way, and like the Motor Tax debacle will probably have to be changed numerous times before it’s even introduced.
I look forward to finding out what taxes other than Stamp Duty will be removed. This tax will abviously bring in more than stamp duty in the long run. So…will it be lower VAT, lower Income Tax?
Or ah! sure, we’ll just find somethign to do with all the extra money. We need to start saving for Cowan’s office for after he retires, not long to go now.
-Rd
Looks like we’ll have a double, triple or even quadruple whammy for many people. Consider this - you buy a three bed semi d in commuterville with your wife/husband/partner in the last 2/3 years. You pay a hefty wodge in stamp duty for the privilege. Now you find that -
- The value of your house has plunged
- Your repayments have shot up
- The price of petrol for your commute has soared
- If one of you uses the train, you now pay €700p.a. extra for parking
- You now potentially face an ongoing property tax, having already paid a lifetime’s worth of taxes via stamp duty.
Not a pleasant position to be in.
Ps, FAO RTE - a levee is what failed in New Orleans. Stamp duty is a levy.
Edited to add - of course, some lucky people will also be paying a property tax on top of their service charges…
Maybe the levee wasn’t sustainable and now the economy is underwater. 
Where did I leave that jacket.
That life jacket?
FF themselves might not want to introduce this. It will immediately hit 10s of thousands (100s of thousands?) of retired or close to retired people all over the country, who have owned their houses since the 60s or 70s.
These people vote for FF, read the news and don’t like new taxes.
I would be in favour of introducing a tax credit to the value of the stamp duty paid by any buyer on one house thus protecting them from Double taxation.
For the Cannies change in tax is just a function of commerce.
roll with it.
Much better than stamp and aids the mobility of workers.
This is inhevitable .
Spot on. That’s what this is really about. How to squeeze more taxes out of the public now that the Stamp Duty milch cow has got terminal mastitis The public sector is frantically searching for ways to get Paddy to pay their bill.
Anyway, it’ll never happen, because a political party that votes this in will be decimated at the next election. They tried it before, it raised feck all money, and was widely abused.
What would make much more sense is capital gains tax on properties sold for say, twice the average house price. That would treat higher end properties like any other form of investment vehicle and would be simple to administer.
What I think they will end up doing is introducing a poll-tax and water charges and this way recoup their losses through heavier local taxation. Easy to administer stealth taxes which can be sold as better than a tax on jobs.
Cheapest property you own could be taxed with lower rate, it is much better than discounts for PPR. There is no incentive to cheat on what your PPR is.
Actually the real problem with this kind of tax is how to find a value of property, you know every house is different, they are rarely sold. It would be best for owners to declare whatever value they choose, with following conditions:
- at any time owner can lower the value of house
- on one day in a year owner can raise the value of house but now more than YoY wage inflation
- whenever house is sold tax is paid on difference between declared value and sale price - it should be high rate like 50%, also this tax would have no exemptions
Taxes have never been popular, that’s a fact. End of the day, there must be a reason why Revenue commissioners dont run for the Nobel Prize
Yes, but that’s why governments introduce them by stealth instead of blatantly. This would be blatant.
No one runs for the Nobel Prizes.
Well if that happens then you’ve made a profit (presumably the value of your property has risen significantly) whats the problem?
(above applies if the property tax is aimed only at investment property and second homes)
If property tax is brought in at a percentage of the value of the property, then the rate at which the stamp duty was paid divided by the percentage property tax would avoid double taxation i.e. Property Tax - 0.5% p.a, Stamp Duty 7% gives 14 years of property tax exemption for the owner of that property while in that property.
The exemption should start from the day of the introduction of the property tax, otherwise it is still double taxation.
I also think that exemption from property tax should exist to allow the retired, widows etc. to remain in the family home. Reduction in your income should not result in you having to leave your home (assuming your mortgage is paid off) because you have to choose between food/heat and tax.
Agree completely.
I have no issue with stamp duty as a transactional tax if it is flatrated and not dependent on the transaction value.
I have a major issue with property taxes applied to PPRs. Fling them on holiday/second homes fine…but not PPRs.
Also property tax as a percentage of a notional value is clueless in a country that can’t even evaluate the value of its property right now.
The question rolling atound in my head is if they looked at this tax did they also review the old chestnut in the UK the poll tax or community charge or whatever its called as it would probably bring a lot more people into the tax net. 