Most homeowners will see modest increases in their local property tax (LPT) next year under changes likely to be approved by the Cabinet this morning to mitigate the effects rising property values have on tax bills.
The changes require legislation to widen tax bands and reduce the rate of LPT, Minister for Finance Paschal Donohoe is expected to tell colleagues.
Property prices have increased by almost a quarter since the last revaluation of properties for the tax in 2021. Fearing substantial hikes in tax bills, the Government is expected to change the way the tax is calculated ahead of the next date for revaluation on November 1st of this year.
[ How will the local property tax changes impact me?Opens in new window ]
Properties on the lower bands – which include the vast majority of houses in the country with valuations under €525,000 – will see their bills increase by €5 and €23 a year.
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Those with properties valued at under €240,000 will pay €95 a year, an increase of €5.
Those with properties valued at between €420,000 and €525,000 will pay €428 a year, an increase of €23.
Those in higher bands, however, will see their bills increase more sharply. In the top band, properties valued at between €1.995-€2.1 million will pay €3,110, an extra €389 a year. Properties valued above €2.1 million pay based on the valuation of the property, rather than a band.
Projections by the Department of Finance suggest the tax will increase by 5-6 per cent for properties under €1.26 million.
Local authorities will continue to be permitted to vary LPT downward by 15 per cent. In 2027, they will be permitted to increase the tax by 25 per cent in their area.
The Cabinet is also expected to approve proposed changes to rent caps, which are likely to be fiercely opposed in the Dáil today by Opposition parties.
It is understood that Rent Pressure Zones (RPZs) will be extended to cover the entire country, with rent increases linked to inflation and capped at 2 per cent. The Government is also likely to promise new protections for renters, though some housing advocates have warned that the changes will mean higher rents and increased homelessness.
In future, sources say, it will be possible to reset rents between tenancies – but only where a tenant leaves voluntarily or has breached their tenancy agreement.
There was further worrying news for the Government when AIB’s latest construction purchasing managers’ index (PMI) warned that the level of home building contracted during May for the first time in nine months amid a wider fall in activity at Irish construction firms.
While some firms were able to increase activity, there were signs of “softening market conditions and uncertainty”, leading to a drop in all types of construction activity, AIB said, though the drop in home building was “only marginal”.
However, there was better news from the Irish Fiscal Advisory Council (Ifac), the Government’s fiscal and budgetary watchdog.
[ Corporate tax receipts forecast to rise despite Trump tariff threatOpens in new window ]
It said corporation tax receipts could surge by as much as €5 billion, as a result of changes in the tax rate applying to companies and the rush to export goods to the US ahead of the imposition of tariffs.
Big companies will start making payments to the exchequer under the increased 15 per cent corporate tax rate by the middle of next year, Ifac said, while most of the biggest taxpayers here are forecast to report increased profits this year, resulting in higher tax payments.
A host of capital allowances used by some of the State’s biggest companies are due to expire, while pharmaceutical firms will likely pay more tax this year amid a surge in exports to the US ahead of the possible imposition of tariffs, Ifac added.
