Certainty – or uncertainty? Agents have opposing vierws on the effect of property tax on the market, writes FRANCES O'ROURKE
THE PROPERTY industry had mixed reactions yesterday to the Government’s announcement that it plans to introduce a comprehensive, graduated property tax early in 2013, rather than in 2014.
Ed Carey, residential head of the Society of Chartered Surveyors Ireland (SCSI) and Mark FitzGerald, chief executive of Sherry FitzGerald, welcomed the announcement.
Ed Carey said “anything that can give certainty around the proposed property tax is a good thing. It will give certainty as to how the tax will be assessed.”
He believes that the basis on which the tax will be charged has not yet been decided. It could, for example, be based on site value and/or square footage/BER rating, for example.
“The SCSI’s view is that the property tax should be transparent and straightforward and that anomalies should be provided for, as the Minister promised.”
Mark FitzGerald says Sherry FitzGerald’s consumer research shows that the public is looking for fairness and transparency and wants to know two to three years in advance what taxes it is facing.
“People knew there would be a property tax to replace the household charge. They may be surprised, they may not welcome the tax, but they do welcome certainty.
“The tax will need to be moderate, shared by many, fair and to deal with anomalies.”
He does not think that the tax will necessarily based on the Commission on Taxation’s report “which was written in a different market”.
If the Commission on Taxation’s 2009 recommendations on a property tax are adopted, taxes could range from €188 up to over €3,000 per year, depending on the size and value of a property. The new tax is likely to be based on self-assessment.
An expert group, yet to be appointed, is to recommend an appropriate system of property tax to Minister for the Environment and Local Government Phil Hogan by next April.
Douglas Newman good chief executive Keith Lowe says “A lot of people will have a lot of trouble coming up with the tax. It’s true that other countries have property taxes, but we’re already heavily taxed. It will need to be well thought out and equitable and should be phased in.
“And it should be charged to tenants: there are landlords who own two or three properties who won’t be able to pay – it would trigger foreclosure.”
The Institute of Professional Auctioneers Valuers (IPAV) chief executive Fintan McNamara believes that the announcement that the property tax is being brought forward will undo much of the good the Budget did for the property industry.
“The Budget gave some relief, with, e.g., measures like the Capital gain Tax (CGT) relief , but this won’t help things at all.” In particular, he fears that the tax will fall heavily on the rental sector. “Landlords with a modest rental income from Pre ’63 investments could be hit for thousands of euro. “
My Home managing director Angela Keegan said “The announcement does nothing for confidence as it adds uncertainty where the Budget brought certainty.
“I think it’s a setback for anyone thinking of buying now – confidence is what we need.”
