Exemptions from property tax to end
Those who bought after 2013 to be hit with costs
TENS of thousands of homeowners who bought their property since early 2013 will see their exemption from property tax end, Leo Varadkar has indicated. Those who purchased a property since January 1, 2013, qualify for an exemption from the tax as long as they occupy the property as their sole or main residence.
However, the Taoiseach has indicated this will come to an end as it is ‘not fair’ given that such homeowners benefit from the same local services as those who pay the tax.
A review of the property tax began earlier this year and is expected to be completed in 2019. Mr Varadkar said: ‘One thing we can do... and we will have to consider this in the new year, is removing the exemption from homes that were bought since 2013. Anyone who bought a home in 2013, 2014, 2015 does not pay property tax. That is not fair because they benefit from the same local services as everyone else.’
Explaining why this exemption was introduced in the first place, he said: ‘That was done for a particular reason in 2013 to encourage increased housing supply, but that is now going in the right direction. So, we need to consider that and it will bring in extra money for local authorities.’
The Taoiseach has repeated assurances given by Finance Minister Paschal Donohoe that the review will take account of the recent steep increases in property prices so homeowners won’t face big tax hikes.
Mr Varadkar said that while they are ‘still doing some work’ on the review, the ‘main thing we want to avoid is anyone facing a significant increase in their property tax, because we just don’t want that to happen’.
‘I know people feel that because house prices have gone up a lot in the last four or five years… their property tax will go up by that amount. We are going to make sure that doesn’t happen,’ he told media in Government Buildings in recent days.
‘We want to make sure that the amount of revenue collected by the local authorities from property tax is roughly the same and that would mean making sure nobody faces a sudden increase in their property tax.
‘That would not occur until 2020 at the earliest in any case.’
When the local property tax (LPT) was introduced in 2013, it was calculated on the value of a person’s property at that time, when prices were only beginning to recover from the crash.
The idea was initially that the valuations would be reviewed three years later, in 2016.
However, Finance Minister Paschal Donohoe’s predecessor Michael Noonan deferred this until 2019, which raised fears that the tax people owe could skyrocket when the revaluations finally take place.
There are different valuation bands at which the tax is currently charged. Those who own a property worth up to €1million pay a rate of 0.18%, while properties worth in excess of €1million are charged 0.18% on the first million, and 0.25% on the remaining portion above that.
One possibility the Government is seriously looking at is reforming the property tax to ensure that all of the money paid goes towards the homeowner’s local authority. The Government has faced calls to ditch the controversial tax entirely or extend exemptions to cover older people who may be asset-rich but cash-poor.