Dublin local authorities stand to lose in the region of €30 million by 2019 in Local Property Tax (LPT) foregone on new homes, figures compiled by Dublin City Council indicate.
The rate of property tax paid by homeowners is based on the value of the property in May 2013. Houses and apartments bought from a builder since 2013 are exempt from property tax. The exemption was introduced when the tax came into effect in July 2013 and was due to last until October 2016.
However, in 2015 the then minister for finance Michael Noonan announced the valuation thresholds for LPT would be frozen until October 2019, meaning households paying the tax will not see an increase in their bill until then.
This extension was also applied to the exemption on homes sold by builders after the 2013 valuation date, giving new home owners an extra three LPT-free years.
Figures compiled by the city council’s finance department show the council has already lost an estimated €5.6 million in potential property tax revenues on exempt new homes.
The figures, which the council's head of finance Kathy Quinn stresses are a rough estimate, are based on approximately 4,800 new homes sold in the city since mid-2013, and use an average valuation of €250,000 per home.
While at the standard LPT rate homeowners would owe the council an average of €405 each, the council applies a 15 per cent discount, resulting in an average annual charge of €344.25. Cumulatively that would amount to €5,594,063 foregone to the city council alone.
Cumulative costs
However, Fine Gael councillor and member of the council's finance committee Paddy McCartan said when the losses of the other three Dublin local authorities are taken into account and the figures are projected to the end of 2019, the cumulative costs are in the region of €30 million.
“The finance department agree with my calculations which show that the city council alone will be facing the potential loss of €15 million to the end of 2019, because the property tax is a cumulative charge,” Mr McCartan said.
“The three other local authorities between them collect approximately the same amount of property tax as the council, so the combined total wouldn’t be far short of €30 million.”
There was a basic unfairness, Mr McCartan said, with the vast majority of homeowners paying a tax that others, some of who would be high earners, were escaping.
"It's inequitable. New apartments at Lansdowne Place in Ballsbridge have prices ranging from €825,000 to €6.5 million. The property tax on €6.5 million is €16,000 a year."
The Government could benchmark new homes on what similar housing was valued at in 2013, he said.
“The council can’t afford to be at a loss of revenue of this magnitude and I will be calling on the Government to close this loophole.”
A Government report by Dr Don Thornhill in 2015 recommended the exemption should not be renewed when the revaluation takes place. A spokesman for the Department of Finance yesterday said it would be considering the recommendations of the Thornhill report "in due course in line with the 2019 timeline".
