Most people in Sligo will be better off or no worse under the new property tax bands
WHILE the recently announced changes to the local property tax is proving controversial in areas of the country with higher house prices, most home owners in County Sligo will either not face any increase or, in fact, will end up paying less tax than they do at present.
The people who will be hardest hit will be the relatively small number living in new homes built since 2013 as from next year they will have to pay property tax for the first time.
And a local auctioneer has warned this week that while people should not undervalue their homes they should also be careful not to overvalue their property, as he said a lot of people had done this in 2013.
When introduced, the local property tax was supposed to be reviewed every three years but with a big increase in property prices in recent years those reviews have been put off for political reasons, as obviously higher taxes would prove unpopular.
In November 2019 a working group was also set up to review how the tax should work going forward and recently a plan for the reform of the tax was brought before cabinet.
The biggest change is that from next year around 100,000 homes nationally that were built from 2013 onwards will now be liable for the tax. An up-to-date valuation will also be used, which will be the price of your property as of November 2021. It is a self-assessment system but Revenue (who collect the tax) can challenge where they feel properties may be undervalued.
Sligo County Council figures from September 2019 show that over 93% of the just over 29,000 homes in County Sligo are presently valued for the tax at under €200,000.
They calculated that 44.2% of homes were under €100,000 (paying €90 tax), 33.1% at between €100,001-€150,000 (€225) and 16% at between €150,001 and €200,000 (€315).
Obviously there has been an increase in value of those homes since 2013 but the valuation bands have also been widened.
The under €100,000 band is now up to €200,000, the €100,001-€150,00 has risen to €200,000-€262,500 and the €150,001 and €200,000 band has gone to €262,501-€ 350,00.
Auctioneer Roger McCarrick, of Roger McCarrick and Sons, Sligo town and Tubbercurry, told the Sligo Weekender that there will be a saving for a lot of people. “A lot of properties in small towns and rural areas would be worth less than €200,000, which is now the upper limit for the first band,” he said. And he said that the majority of homes in the county would be under the €265,000 upper limit for band two.
“There would be houses in and around Sligo town and in places like Strandhill and Rosses Point where there would be houses valued between €300,000 and €400,000 and over but they would be in the minority.
He said that the number of properities worth €400,00 to €500,000 or more is small.
Mr McCarrick said for the majority of people, whose properties were below €250,000-€300,000, there would overall be savings.
However, he said that it should be remembered that there were people in County Sligo still in negative equity. “The issue of negative equity has not gone away and that should not be forgotten. These are people who bought roughly between 2005 and 2008 at the top of the madness and some of those people are still in negative equity.
“It is a political question but the question has to be asked as to whether these people should have to pay the property tax.
“I know there are still people struggling in that situation and I am seeing it every day of the week.” He said that there were also people trying to restructure their mortgages with banks. “What is also happening quietly is that people are doing deals with housing agencies, whereby the agency is acquiring the loan from the bank and home owner is then renting it back from the agency. It means the people are being allowed to stay living in their home but they have lost the ownership of it.”
He said there was also the aspect to property tax that in Dublin and some other cities people might be living in a house that is now worth €750,000 or €1m but they might be on low income, although that was not a situation that arose much in Sligo.
Mr McCarrick said that after 2008 the value of houses in Sligo would have fallen between 25% and 50%. “A house that was worth €300,000 in 2008 went down to €100,000 or €150,000. There are a lot that are not up to their pre-2008 value but they might be up to 70%-80% of it.
But he said that most houses would have gone up in value since 2013, with the biggest rise in values “the closer you are to Sligo town”.
He said that prices would have gone up in other parts of Sligo as well due to the shortage of houses.
“There is very little in the way of new estates being built. It is mostly in and around Sligo town. There is nothing being built in towns
like Tubbercurry and Ballymote.” The reason is that while there is demand the cost of building has gone up to such an extent that it is not financially viable for builders to build new houses.
He said: “For instance, for a builder to make money on a three-bed semi-detached in Tubbercurry it would need to be making €260,000 or €270,000 but the market is not paying that kind of money. Those kind of houses are only making €130,000 or €140,000 on average.
But while most people will obviously be hoping to pay less tax, he said that his experience in 2013 was the many people overvalued their homes and end up paying more tax than they should have.
“In 2013 when the tax came in, people got a letter telling them that houses in their area were on average of a certain value but a lot of people were of the opinion that their house was worth more than that and valued their house in a higher band they should have. “But a year or two later the penny dropped with them and they realised they had overvalued. In the years followng 2013 I would have done hundreds of retrospective valuations and in many cases people got money back. But they are some people continuing to pay more than they should be.” He said there will also be the sitation for many people that the value of their homes maybe on the borderline of two bands.
“There will cases where a house might be worth €190,000 or it it could be €210,000.”
He said that his advice to people in those situations is to get a professional valuer’s opinion.
“Auctioneers and valuers will give them a proper valuation and it is worth to get that, especially is a property is on the border of two bands.”