Homeowners are worried about how the Revenue Commissioners will calculate the new property tax due this July

The Revenue Commissioners’ move to administer the new property tax is raising questions among homeowners and industry professionals as to how accurate house value calculations will be.

A key concern is that Revenue will draw values from the Property Price Register and assign neighbouring houses the same value, when these properties can vary greatly because of size, condition and aspect.

Revenue has said the estimates issued to homes will be “indicative” and owners can still self assess their properties and seek a different valuation.

Dublin-based residential valuer, Patrick Sheehan of Independent Valuations, says: “Understating the tax won’t be such an issue for small value homes where the difference between bands is marginal. But for higher value homes there is an incentive to understate because once the tax is set, it crystallises for three years.”

Taking the example of homes on Ailesbury Road in Dublin 4, where recently number 43 sold for €2.65 million and number 11 sold for €4.6 million. The tax on the first will be €6,000 a year and 11 will incur €10,800. Taking the lower value will save the owner €4,800 annually over the next three years because the charge is fixed until 2016.

The Revenue says it will use its stamp-duty data and other sources to establish values.

Under the Finance Act 2012 Revenue can obtain homeowner data from third parties. Utility companies such as Electric Ireland have some of the most comprehensive house data in the State, including information about the property sizes.

Homeowners who appeal the estimate will open themselves to checks and inspections from Revenue. One Dublin estate agent says homeowners have called with queries about what their homes are worth. He believes Revenue’s involvement will help standardise values on roads. “It will deter people from fiddling the figures too much. They are far less likely to go to the bother – unless it’s justified – if the Revenue is bearing down on them through an appeals process.”

Agent Vinnie Finnegan says he would be “astonished if the letters are issued and 90 per cent of people are happy”.

“The Revenue gets commercial rates wrong all the time. Even with empirical data they had a lot of wild variations when the Property Price Register was published. If they can get hard data wrong, what will they do with estimates.”

It’s also possible people will defer doing home improvements until the tax is set.

One Dublin 4 resident who recently built a €300,000 extension, says he would not have done so had he known he would be penalised through the tax for adding value to his home. By using local goods and services he estimates the work already raised about €60,000 in Vat for the Government.

Revenue has indicated there will be a complete register of the 1.6 million-plus households liable when the new charge becomes payable this July.