Property Tax - suggestions

andrewdeerpark

Property Tax - merits & suggestions

Government considering property taxation at the moment my suggestions for a fair tax:

· Introduce a yearly tax rate of 1% of the value of individual’s 3rd and subsequent properties (if jointly assessed couple your 5th property).
· For assessment when you breach this limit you would have to get an auctioneer to value your entire property portfolio.
· The properties of the highest value in descending order, taxed at 1% of their value in excess of 2. You own 6 properties you pay tax of 1% a year on the 4 of highest value.
· This valuation would have to be amended every 3 years or earlier if an individual required, at your expense.
· Heavy fines including prison and repossession for undervaluation of property liable by both the person undertaking the valuation and the owner.
· Include development exclude farmland, if you convert land back to farmland from development land status it cannot be changed back again for 10 years.
· If you are owner of a company owning land then your 1% liability is divided by you share ownership.
· Each company you own or share property in is counted as 1 property; to stop individuals dodging by setting up companies and they owning the property.
· Includes commercial property and foreign properties.
· The buyer would set foreign property evaluation with major undervaluation punished by prison or if inherited and cashed in Revenue would seize the estate with fees.
- No upper limit you own 100 properties you pay tax on 98 of them.
- No tax relief of any kind available to reduce the bill

Still needs a bit of filling out but I think the land hoarding and property build-up by big developers has to stop for good and this is the best way as it does not punish middle class individuals with an investment property or holiday home.

The valuation work would give auctioneers much need revenue.

So as not to have double-taxation I would abolish stamp duty on almost all property transactions.

Discuss??

McSandwich

andrewdeerpark wrote: »

So as not to have double-taxation I would abolish stamp duty on almost all property transactions.

Discuss??

Should those who already paid stamp duty be exempt or pay a lower rate?

andrewdeerpark

Afraid not McSandwich as it would be a bureaucratic nightmate, key to my idea is simplicity.

A clean slate tax with a new constant revenue stream property taxation plan.

silverharp

andrewdeerpark wrote: »

Still needs a bit of filling out but I think the land hoarding and property build-up by big developers has to stop for good and this is the best way as it does not punish middle class individuals with an investment property or holiday home.

The valuation work would give auctioneers much need revenue.

I'd examine why was there/is there land hoarding in the first place, I'd wager it is down to a corrupt or inefficient planning sytem. Fix that and your reasoning for a tax might change?

Re the valuation work, here you are introducing more useless "hole digging and filling" into the system.

You may need to mention what your objective of this tax would be, is it purely to generate revenue?

If there was going to be a property tax I'd favour a straight forward tax per sq foot, it could be considered a green tax similar to cars, with various incentives built into it, all be it the horse has already bolted

ixoy

Is there any way for a property tax to work out that will avoid renters (generally those on the lower income to start with) being forced to pay for the owner's rent tax in the form of increased rents? Or will we merely hope that supply/demand means they won't get away with it?

mountainyman

Surely it has to include the PPR or it won't bring in the revenue we need.
We also need to get the Bacon report implemented (40 years later)

blast05

Think those suggestions look excellent. I think a flat tax accross the board on all properties would be very unjust on those people who have tried to take care of their futures by investing in a property or 2.

One thing re the tax, it was interesting to note that the FF parliamentary party were against it when they met yesterday - not surprising i guess given that the vast majority of them probably have multiple investment properties as would be the case accross all parties.

gurramok

Why 3rd properties?

Alot of people don't even have a 2nd property!

Suggestion - Tax the 300,000+ empties out there to get them on the market rather than leave them idle as a result of speculation

Agent J

andrewdeerpark wrote: »

Property Tax - merits & suggestions

Government considering property taxation at the moment my suggestions for a fair tax:

· Introduce a yearly tax rate of 1% of the value of individual’s 3rd and subsequent properties (if jointly assessed couple your 5th property).

The rest of your proposal is sound enough but it falls down at the 1st hurdle?

3rd property? 5th for a couple?
If a couple has 4 properties they should be paying some sort of tax on it.

The rest of us would like to have one piece of property let alone 3.

Anything after your principle primary residence should be subject to a tax.
The whole people buying investment properties is a red herring. If you can afford 2 properties then you can pay tax on the 2nd one.

newman10

Maybe now is the time to bring back domestic rates :eek: and the we will have an equal base so that everyone pays

thebman

I'm all for a tax on 2nd properties and any other additional properties people may have.

Houses are for living in, if you have additional ones and if your renting them, its a business.

You have things like Holiday Homes that might need to be taken into account but I don't there is a good way to differentiate that you could find out and they can rent their holiday home the rest of the year to pay the tax.

P. Breathnach

thebman wrote: »

Houses are for living in, if you have additional ones and if your renting them, its a business.

If a house is rented out, chances are that people are living in it.

Yes, renting property out is a business. Profits are subject to tax.

ManFromAtlantis

P. Breathnach wrote: »

If a house is rented out, chances are that people are living in it.

Yes, renting property out is a business. Profits are subject to tax.

dead right.........and this tax along with stamp duty paid helps the so called 'less fortunate'

ixoy

P. Breathnach wrote: »

If a house is rented out, chances are that people are living in it.

Yes, renting property out is a business. Profits are subject to tax.

Problem being though that if they owe 50e now a month for a property tax, they may just increase tenant's rate by 50e a month. Now the people paying for this are the renters, generally those on lower incomes.

P. Breathnach

ixoy wrote: »

Problem being though that if they owe 50e now a month for a property tax, they may just increase tenant's rate by 50e a month. Now the people paying for this are the renters, generally those on lower incomes.

I don't think that is true. The rental market is like the house sales market in that vendors already charge as much as the market will bear. At the moment, market conditions favour the buyer.

silverharp

P. Breathnach wrote: »

I don't think that is true. The rental market is like the house sales market in that vendors already charge as much as the market will bear. At the moment, market conditions favour the buyer.

Indeed just like most if not all of the tax breaks and mortgage relief etc. went into the pockets of developers on the way up.
You could argue that marginal landlords could be pushed over the edge by an additional tax that they cant pass on.

P. Breathnach

silverharp wrote: »

You could argue that marginal landlords could be pushed over the edge by an additional tax that they cant pass on.

You could, indeed. And, for many, it's the edge of a precipice: the resale value of their property might be far less than they paid, and well below what they borrowed.

Agent J

P. Breathnach wrote: »

You could, indeed. And, for many, it's the edge of a precipice: the resale value of their property might be far less than they paid, and well below what they borrowed.

Maybe im just being a hard hearted SOB but i hear the violins playing when i read stuff like that.

Landlords might have to sell some of their houses?
My heard bleeds for them. It really does. They were all ready and willing to roll in it during the good times and helped push the price of property to insane levels.

And the increase wont go on rent. It a renters market out there again at long bloody last....

Now sanity is begining to be restored to the market at long last and a % based tax on all property apart from principal residence would do a good deal in making sure we dont have such an unsustainable boom again

Godge

P. Breathnach wrote: »

You could, indeed. And, for many, it's the edge of a precipice: the resale value of their property might be far less than they paid, and well below what they borrowed.

Are they any different from people who invested their retirement lump sums in Anglo Irish Bank shares? If you invest in Government bonds, you get a low return to reflect the low risk. If you invest in property or shares you get a higher return to reflect the higher risk. If you were foolish/unlucky/stupid enough to invest at the wrong time, and you lose money, those are the breaks.

Godge

Valuation is a problem. The Valuation Office is years behind in assessing property for commercial rates - thought probably with the collapse some of the old valuations might be right!!

A better idea would be to have bands. A property valued between 0 and 500,000 euro carrying one tax, a value up to 1 million another, and so on. Valuation issues only arise at the margins between bands.

Using auctioneers is a good idea but a national tender would be the best value from the Exchequer's point of view.

Why exempt the first residence altogether? What about J.P. McManus' monstrosity? It would probably be the only tax he paid in Ireland anyway. Ditto Denis O'Brien and other tax exiles. You could exempt principal residences below a certain threshold and where income is also below a certain limit, this would protect pensioners in a long-standing family home, so long as the house wasn't too large.

Agree that stamp duty should be abolished. Revenue could be up to 2 or 3 billion even with a low tax.

Why exempt farms and land? Look at the 400m hole in the budget this year because of farmer's grants. The farming community get huge subsidies. Either they pay commercial rates like business do or they pay a property tax. I don't mind which.

P. Breathnach

Godge wrote: »

Are they any different from people who invested their retirement lump sums in Anglo Irish Bank shares? If you invest in Government bonds, you get a low return to reflect the low risk. If you invest in property or shares you get a higher return to reflect the higher risk. If you were foolish/unlucky/stupid enough to invest at the wrong time, and you lose money, those are the breaks.

I'm not contesting that. What I am contesting is the justice of hitting people in such a position with an extra tax -- most particularly, a flat-rate tax which does not allow for the fact that the property taxed might represent negative equity.

nesf

Godge wrote: »

Valuation is a problem. The Valuation Office is years behind in assessing property for commercial rates - thought probably with the collapse some of the old valuations might be right!!

A better idea would be to have bands. A property valued between 0 and 500,000 euro carrying one tax, a value up to 1 million another, and so on. Valuation issues only arise at the margins between bands.

Eh, bands still require you to go out and value each and every piece of property though which is the real problem with property taxes and why they can be so expensive to implement.

Godge

nesf wrote: »

Eh, bands still require you to go out and value each and every piece of property though which is the real problem with property taxes and why they can be so expensive to implement.

Not necessarily. You can rely on self-assessment initially. Only those properties whose valuation looks out of place relative to their postcode/locality (hurry up and introduce proper postcoes an Post) or is at the margin of the band needs to be valued.

You can also make sure that a property cannot be sold or probated without a proper sign-off on taxes paid by solicitor and auctioneer, with big penalties if underpaid.

If large scale valuations are needed put out to tender to big auctioneers (Remax or Sherryfitz would love the business) with appeals only to the Valuation Office. Out of the revenue, you could afford a few extra valuers!

nesf

Godge wrote: »

Not necessarily. You can rely on self-assessment initially.

I sincerely doubt that many people could accurately (even to within 10-20%!) value their homes at the moment given the current market. How do you distinguish the genuine understatements from the honest mistakes given that the market is in free fall and from all accounts the listed property prices are nothing close to the prices that properties are selling at.


I think a tax of an asset as a fraction of its value only makes sense with homogeneous products that are in liquid markets. Houses are neither of these things.

P. Breathnach

nesf wrote: »

I sincerely doubt that many people could accurately (even to within 10-20%!) value their homes at the moment given the current market.

I certainly have no idea what my house is worth -- never did, because it's a one-off to an idiosyncratic plan. I know its rateable valuation, though, as the local authority gave me notice of it, even though rates had already been abolished when it was built.

Is is still the practice to assign valuations to domestic property?

nesf

P. Breathnach wrote: »

Is is still the practice to assign valuations to domestic property?

I doubt it but it's possible that they didn't fire the guys whose job it was to rate places after they abolished...

andrewdeerpark

Just to clarify my reasoning on the 3rd property (5th for a couple) threshold is:
- Most people with 2 homes are not professional investors they are either
a) Holiday home buyers either in Ireland or abroad, who were sucked in on "free" foreign trips etc
b) The last poor fools who bought into the buy-to-let investment idea and are now struggling with that investment.

The main aim of any property tax has to be to get revenue from the professional investor who up to now has had an easy time of it tax wise. If they have invested and sold over the past 10 years they have made serious money.

The second aim (excluding primary residence) is to stop a future property bubble by making buying houses for investment less attractive as an investment giving the first time buyers and location change transactions priority, over time the mobility of the workforce should improve.

I do not believe rents would go up because of the current oversupply coupled with the return of large numbers of eastern European workers so now is the time.

The postcode valuation is another possibility plus instead of actual property numbers you could use a self assessment set value. So say if your property assets exceeded .5 million you pay property tax, again all good ideas.

Any tax must be based on property value for it to be fair excluding those individuals who did not profit buying the boom but are not "asset rich and cash poor now".

funky.monkey

Any property tax is very unfair, as it doesn't take account of peoples ability to pay. for example two families on the same street - one is a dual income couple with no children earning 100,000 a year together. For them 1000 euros a year property tax is 1% of their income. In the same street a one income family bringing in 25,000 a year and having 3 children. Under a property tax they both pay the same rate, but 1000 means a heck of a lot more to the family than to the dual income couple.
I'm a low wage worker (and union member) and I would much rather pay 50% income tax than any property tax, as I know if I lose my job, I don't have to pay income tax, but under a property tax, I'd still have to pay it even if I have no income
.

mountainyman

The lwo income family sells their house and moves. A property tax is a highly fair tax and generally in Europe doesn't include the PPR.

flanzer

Does anyone know was it introduced yesterday? I heard something to the effect, 'there will be a tax on second homes' but was quickly brushed aside to matters concerning the public sector.

Well was it introduced or not and how much was it? Or is Cowen still looking after his buddies in property development?

ManFromAtlantis

ya, heard something about property tax, but WHAt was he saying about it????????