Property Tax - suggestions

Uncle Junior

A lot of kites have been floated recently, including the Central Bank Governor suggesting a tax of €1,000 on the 1.7million houses in the country. It will be interesting to see what the Commission on Taxation reports back with in regard to property tax. It's also interesting to note all "not on PPR" comments, and claims that property tax is not levied usually on principal residences. Friends of ours living in New Jersey pay about $40,000 a year in property tax on a house worth about $1.5million (this is based on the square footage of the house which is an embarrassing 6,500 square feet) while relatives in a small town in Yorkshire pay £1,500 a year for a small 3-bedroom terraced house (plus another £500 each year in water rates).:eek:

foundation10

Abolish stamp duty for a period of 5 years. The loss of revenue from this which be offsett from the VAT receivable from new property transactions whenever the market turns. Residential property tax of €1000 is a non runner. Property tax should be levied on all investment property and all property related tax reliefs should be abolised immediately

blast05

Residential property tax of €1000 is a non runner. Property tax should be levied on all investment property

Why not on principal primary residence ?

flanzer

blast05 wrote: »

Why not on principal primary residence ?

With more and more home owners losing their jobs, it's bad enough for them to meet their daily needs and meet mortgage repayments without having to pay an annual property tax also

P. Breathnach

flanzer wrote: »

With more and more home owners losing their jobs, it's bad enough for them to meet their daily needs and meet mortgage repayments without having to pay an annual property tax also

So it's okay to hit owners of investment properties when rents are falling and many properties are lying empty?

It's simplistic to regard all owners of investment properties as wealthy people with assets worth millions. A proportion of them might be. But many own a single property or two properties, are paying on mortgages, and have negative equity. For some, the property is their personal pension plan, and their income is much reduced.

Yes, if somebody is unemployed, there is a case to be made for lessening the burden of any property tax. But, happily, most of us are not unemployed.

gurramok

P. Breathnach wrote: »

So it's okay to hit owners of investment properties when rents are falling and many properties are lying empty?

It's simplistic to regard all owners of investment properties as wealthy people with assets worth millions. A proportion of them might be. But many own a single property or two properties, are paying on mortgages, and have negative equity. For some, the property is their personal pension plan, and their income is much reduced.

So what? Can't believe you posted this.

Investment properties are exactly what they are, investments. They go up and down and are not guaranteed.
This thing about pension is a con, they were duped through their own ignorance and bought into the bubble to make their money.

My pension from work is down in value and may end up going up and down many times before retirement, i know the risk, same with property.

Many people out there do not have a single property and end up paying rent for years. Ask them if they have any sympathy for Buy To Letters who froze them out of the market for years driving up prices.

Leave the renters market to professional landlords, not cowboys out to make a quick buck short term and those who treat property as a pension when in fact it should not be.
Roll on that property tax. Professional landlords would have done their sums to have the ability to pay. Those that cannot afford to pay a tax never mind a mortgage on that zillionth property they 'own', you cannot afford them and are living beyond your means.

P. Breathnach

gurramok wrote: »

So what? Can't believe you posted this.

Why ever not? I'm dealing with facts. I know people who have retired from business, sold the shop, and invested in rental property.

Investment properties are exactly what they are, investments. They go up and down and are not guaranteed.
This thing about pension is a con, they were duped through their own ignorance and bought into the bubble to make their money.

Rather like people who bought shares in the banks, then.

My pension from work is down in value and may end up going up and down many times before retirement, i know the risk, same with property.

You have an investment that falls and rises in value; so have they. Is yours in some way more virtuous?

Many people out there do not have a single property and end up paying rent for years. Ask them if they have any sympathy for Buy To Letters who froze them out of the market for years driving up prices.

So one buyer is more deserving than another? Look at it another way: if a house is let, it means that somebody has a place to live.

Leave the renters market to professional landlords, not cowboys out to make a quick buck short term and those who treat property as a pension when in fact it should not be.

What's a "professional landlord"? To me, it means a person who rents out property in the hope of making a net income. That can be an income for one's retirement, and I don't see any reason why "it should not be". And then you conflate it with people why buy property to make capital gains in the short/medium term. People who seek profit rent as their retirement income are typically not planning to realise the capital in a property.

Roll on that property tax. Professional landlords would have done their sums to have the ability to pay.

That's a reckless assertion. Many people have done their sums and find that the situation has changed enormously. They are now doing new sums with a whole new set of variables, and have far less scope to pay than they envisaged 12-18 months ago.

Those that cannot afford to pay a tax never mind a mortgage on that zillionth property they 'own', you cannot afford them and are living beyond your means.

I am sure that the large, probably overwhelming, majority of owners of rental homes have one or two properties.

I'm not advocating giving them money. I'm simply arguing that there is little justice in levying a charge on them as a category while exempting the rest of us.

[Declaration of lack of interest: I do not own a rental property; I am (along with Herself) a home owner.]

gurramok

To sum up your post.

Those people you know 'invested', thats the key word. They knew the risks of getting involved in property. It either works out or now.

A buyer buying a home to live in deserves more sympathy on the tax front than an investor who is out to make money, understand?

Professional landords will not have huge mortgages in my opinion and they give a hoot about their tenants.
Its a business to them, they treat their customers well to get that guaranteed income without vacant periods.

Unike the unprofessional ones(BTL's) who have no idea of how the rental market works. They base their asking rents on their ability to pay their huge mortgages obtained during the bubble years rather than market demand. (Lots of anecdotal evidence of interest rate rises passed onto tenants in '07/08, search rising rents issue in google/boards)

I'm not advocating giving them money. I'm simply arguing that there is little justice in levying a charge on them as a category while exempting the rest of us.

As i said above, the rest of us did not treat our homes(PPR's) as profit making commodities. Investors in property are just that, investors. A whole different ball game, its risk taking and there is no guaranteed profit at the end hence relying on it as a pension is insane.
At the mo, there is an excess supply of rental property. Its an ideal time to levy a tax to weed out the ones living beyond their means whose debt is serously shaky for the banks and bring stability to the market where that stability is professional landlords.

P. Breathnach

gurramok wrote: »

To sum up your post.

Those people you know 'invested', thats the key word. They knew the risks of getting involved in property. It either works out or now.

Sure, every investor takes a risk. But the imposition of an extra tax changes the risk, and you are advocating doing that at a time when the market has already moved to worsen their position.

A buyer buying a home to live in deserves more sympathy on the tax front than an investor who is out to make money, understand?

No, I don't understand. And I don't think that is evidence of stupidity on my part.

Professional landords will not have huge mortgages in my opinion and they give a hoot about their tenants.
Its a business to them, they treat their customers well to get that guaranteed income without vacant periods.

That is a really strange definition of of a professional landlord. There are good landlords, and there are bad landlords, and many between the extremes. And that generalisation applies to wealthy landlords and relatively small-scale operators.

Unike the unprofessional ones(BTL's) who have no idea of how the rental market works. They base their asking rents on their ability to pay their huge mortgages obtained during the bubble years rather than market demand. (Lots of anecdotal evidence of interest rate rises passed onto tenants in '07/08, search rising rents issue in google/boards)

There are good economic reasons why rents might rise when interest rates rise.

As i said above, the rest of us did not treat our homes(PPR's) as profit making commodities.

I am a fully-fledged member of "the rest of us". It doesn't give me any sense of virtue.

Investors in property are just that, investors. A whole different ball game, its risk taking and there is no guaranteed profit at the end hence relying on it as a pension is insane.

Hyperbole. Yes, there is uncertainty, but it is not insane to invest in property in the hope of generating long-term income.

At the mo, there is an excess supply of rental property. Its an ideal time to levy a tax to weed out the ones living beyond their means whose debt is serously shaky for the banks and bring stability to the market where that stability is professional landlords.

What's this about weeding them out? Do you want to force large numbers of relatively small investors to take a capital loss, and then flood the housing market at a time when there is already a huge oversupply in that market?

gurramok

Yes, there is uncertainty, but it is not insane to invest in property in the hope of generating long-term income.

It seems you cannot differentiate between using a property as a business and using a property as a pension. (the latter is highly foolish and the lazy mans way of avoiding working for a living)
Its better to have an over supply to make prices affordable for everyone than to have an undersupply driving prices sky high.
I'm not forcing them They obviously cannot afford those properties if they cannot even afford a tax of €1000 pa which is equivalent to just under one months vacant period , they are a factor in destabilising the banking system. Of course if they go bust, the sales market will stabilise even further, that's good news.

We don't want a bubble scenario again.

P. Breathnach

gurramok wrote: »

It seems you cannot differentiate between using a property as a business and using a property as a pension. (the latter is highly foolish and the lazy mans way of avoiding working for a living)

No. I will not make such a spurious differentiation. It's nonsense to say that using a property as a pension is a lazy man's way of avoiding working for a living (or indeed woman's). Any pension scheme is way of using accumulated assets to generate income.

Its better to have an over supply to make prices affordable for everyone than to have an undersupply driving prices sky high.

What's that got to do with anything I said?

They obviously cannot afford those properties if they cannot even afford a tax of €1000 pa which is equivalent to just under one months vacant period

In economics, everything is decided at the margin.

they are a factor in destabilising the banking system.

So are lots of other categories of borrower. But I don't blame most borrowers: I blame the lenders as a collective.

Of course if they go bust, the sales market will stabilise even further, that's good news.

We don't want a bubble scenario again.

What do you mean by "stabilise"? The market is falling fast; there is already oversupply; you are in favour of forcing more supply onto that falling market. That would depress prices even further, leading to greater levels of realised negative equity and a consequent increase in defaults on bank loans, further problems for the banks, possibly a need for yet more capital injection...

This is an economics forum, not an "I really dislike people who bought property as investment" forum.

blast05

A buyer buying a home to live in deserves more sympathy on the tax front than an investor who is out to make money, understand?

What about the tens of thousands of holiday homes that are unoccupied bar a few weeks of the year ?
These aren't purchased as investments - these are built or bought for enjoyment. If we go down the route of putting an extra tax on something people use for enjoyment then where do you stop - vintage cars, cruise boats on the Shannon, high end racing bikes (both motor and cycling) .... etc etc etc. And what about holiday homes owned by foreigners - how do you implement a scheme whereby the owner pays a grand a year ?
And also, what about an investor in the stock exchange - someone who has invested in shares rather than buying a house? Exact same principles as buying an investment property applies and yet they are only subject to capital gains tax, exact same as the profit on investment properties.

It seems you cannot differentiate between using a property as a business and using a property as a pension. (the latter is highly foolish and the lazy mans way of avoiding working for a living)

"Avoiding working for a living" ?? I can't even begin to think what sort of "never never" land logic you are employing there

Professional landords will not have huge mortgages in my opinion and they give a hoot about their tenants.

With all due respect, but you really don't have a clue. Any "professional" landlord who has bought a property in the last 10 years (whatever a professional is in this case - somebody who has multiple properties i guess? or is it someone who bought their investment properties prior to the Celtic tiger ? - perhaps you could enlighten us) will have borrowed a high enough percentage of the price to ensure there is little to no tax liability on the rental income. If the market changes for the worse shortly after they buy it or if government policy changes then they find themselves in a negative position - as would be the case for any landlord (not just professional) who has bought in the lst 3 to 5 years.

gurramok

To the both of you.
Unprofessional landlords in my opinion are those that are overstretched as living beyond their means, in for a quick buck(like flippers) rather than providing a service for the long term to their tenants.
Having multiple properties is not an issue, having huge mortgages is not a big issue no matter when they were purchased either(yes, they do write off mortgage interest against tax) as long as they can afford them and treating it like a business with customer care(tenants) at heart.
I go back to the point of a €1,000 tax. If a landlord cannot afford that, he/she should not be in the business as that is about one months vacancy period. God help a landlord who falls back on a mortgage payment when their property is vacant for only a month!

What do you mean by "stabilise"? The market is falling fast; there is already oversupply; you are in favour of forcing more supply onto that falling market. That would depress prices even further, leading to greater levels of realised negative equity and a consequent increase in defaults on bank loans, further problems for the banks, possibly a need for yet more capital injection...

This is an economics forum, not an "I really dislike people who bought property as investment" forum.

Hold on there. I have two associates who own properties who are in it for the long haul and treat their tenants with respect. One bought pre-bubble and the other during the bubble. Negative equity does not bother them as long as they afford the mortgage. They will end up selling if they cannot afford it, simple as.

Its tough if certain people bought at the peak in 2006. Nobody put a gun to their heads to take out huge mortgages they cannot afford. They should of done some research into the biggest financial transaction of their lives just like my associates did. I don't have a 'dislike for property investors' so your assertion is mistaken.

I have issue with those who are overstretched, they are a danger financially to the banks themselves. They should get out as they are an unstabilising force to the property market. Them exiting will do wonders to both their own lives and the banks as well as the market.

blast05 wrote:

And also, what about an investor in the stock exchange - someone who has invested in shares rather than buying a house? Exact same principles as buying an investment property applies and yet they are only subject to capital gains tax, exact same as the profit on investment properties.

Investors are investors, they know the risks. Here, your treating property like shares, they are different. Investing in shares is investing in a company creating a strong private sector hence providing stability for the economy which should be No. 1 on the list for any investor, not property.
Investing in property en masse which happened here has been a huge destabilising force and it should be discouraged by way of a tax so only real professionals can enter the market who know what they are doing unllike the BTL's

Flippers/speculators - tax them out of the heavens, they deserve no sympathy.
Holiday homes - we'll have to figure out a way of determining if a house is one. Yes they should be taxed too. If one can afford 2 homes, they can well afford a tax on the 2nd one just like in the most of the EU.

P. Breathnach

gurramok wrote: »

Unprofessional landlords in my opinion are those that are overstretched as living beyond their means, in for a quick buck(like flippers) rather than providing a service for the long term to their tenants.

This specious definition is a load of bollocks that you seem to apply selectively, even capriciously. Why is somebody who invests in rental property as a pension scheme unprofessional?

I go back to the point of a €1,000 tax. If a landlord cannot afford that, he/she should not be in the business as that is about one months vacancy period. God help a landlord who falls back on a mortgage payment when their property is vacant for only a month!

More bollocks. You simply ignore what I said about the marginal effect.

Hold on there. I have two associates who own properties who are in it for the long haul and treat their tenants with respect. One bought pre-bubble and the other during the bubble. Negative equity does not bother them as long as they afford the mortgage. They will end up selling if they cannot afford it, simple as.

Its tough if certain people bought at the peak in 2006. Nobody put a gun to their heads to take out huge mortgages they cannot afford. They should of done some research into the biggest financial transaction of their lives just like my associates did. I don't have a 'dislike for property investors' so your assertion is mistaken.

I have issue with those who are overstretched, they are a danger financially to the banks themselves. They should get out as they are an unstabilising force to the property market. Them exiting will do wonders to both their own lives and the banks as well as the market.

Yet more bollocks. The quality of service provided by a landlord is probably unrelated to that landlord's debt situation other than in the most extreme cases where a landlord is simply unable to afford necessary repairs to a property. Some of the worst landlords I know of are a long time in the business, have a number of properties, and little or no debt -- the sort who seem to meet your definition of "professional". I also know good landlords who satisfy those criteria.

Investors are investors, they know the risks. Here, your treating property like shares, they are different. Investing in shares is investing in a company creating a strong private sector hence providing stability for the economy which should be No. 1 on the list for any investor, not property.
Investing in property en masse which happened here has been a huge destabilising force and it should be discouraged by way of a tax so only real professionals can enter the market who know what they are doing unllike the BTL's

The past is unchangeable.

Flippers/speculators - tax them out of the heavens, they deserve no sympathy.

Hang on a moment: you're changing your ground. You have also attacked those landlords that you, by reference to some yardstick that the rest of us can't see, categorise as "unprofessional", but which seems to apply to people who invest as a way of having an income in retirement.

You cannot tax people on their motives, only on their actions. It is extremely distasteful to me that you arrogate to yourself some sort of moral authority that allows you select between investors and heap opprobrium on some but not on others -- where nobody has broken any law and where your criteria are idiosyncratic.

Holiday homes - we'll have to figure out a way of determining if a house is one. Yes they should be taxed too. If one can afford 2 homes, they can well afford a tax on the 2nd one just like in the most of the EU.

If you want to follow the example of most of the EU, then you should agree to taxing all homes.

I don't know why I am bothering. You ignore what I say and repeat the same trite arguments.

Fighting Irish

thebman wrote: »

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.

No

Property taxes are stupid

P. Breathnach

Fighting Irish wrote: »

Property taxes are stupid

Would you care to explain why?

gurramok

P. Breathnach wrote: »

This specious definition is a load of bollocks that you seem to apply selectively, even capriciously. Why is somebody who invests in rental property as a pension scheme unprofessional?

To repeat, there is no guaranteed income at the end of the day. That pension is screwed if there is no tenant there. How is a vacant building going to generate money in retirement?

Yes its a risk, but its a huge risk. It is a lazy mans way out of investing as it does not generate wealth, thats my opinion, i don't care if you like it or not.

P. Breathnach wrote: »

More bollocks. You simply ignore what I said about the marginal effect.

Marginal affect? Don't you realise that mortgages are 35 yr things these days. A tax will have to be paid every year for that property for one months rent. If an investor cannot afford that small sum, they should not be in property.

Yet more bollocks. The quality of service provided by a landlord is probably unrelated to that landlord's debt situation other than in the most extreme cases where a landlord is simply unable to afford necessary repairs to a property. Some of the worst landlords I know of are a long time in the business, have a number of properties, and little or no debt -- the sort who seem to meet your definition of "professional". I also know good landlords who satisfy those criteria.

We agree to disagree. I have issue with BTL's mostly, they are unprofessional. Of course there would be the odd few cowboy landlords old style, its only in the bubble that we had tens of thousands buying property as an investment each year who never should have got involved, that never happened in previous decades hence they are a huge risk to the stability of the economy.

The past is unchangeable.

Lets not make it happen again. Investing in property should be a last resort. It makes sense, lets invest in companies who actually generate wealth.

Hang on a moment: you're changing your ground. You have also attacked those landlords that you, by reference to some yardstick that the rest of us can't see, categorise as "unprofessional", but which seems to apply to people who invest as a way of having an income in retirement.

I was responding to blast05's addition of holiday homes into the equation. Having a holiday home is a luxury not an essential. The vast majority do not a holiday home. Services have to be provided to that holiday home on the coast of Galway for example, a tax should be paid by the owner as it costs alot to bring services to that remote holiday home.

You cannot tax people on their motives, only on their actions. It is extremely distasteful to me that you arrogate to yourself some sort of moral authority that allows you select between investors and heap opprobrium on some but not on others -- where nobody has broken any law and where your criteria are idiosyncratic.

Are you defending Flippers/speculators??

They were wreckless. Ask any PPR buyer in the last 7 years of their opinion of them.

If you want to follow the example of most of the EU, then you should agree to taxing all homes.

Yes i do. Every other country has a property tax of some sort. Here in good ole Ireland, it needs all the poltical parties to come on board for it to make it work as some Irish people do not wish to pay for services to their property.

Fighting Irish

P. Breathnach wrote: »

Would you care to explain why?

Because in theory you'd never own your house. If you slaved away for years to buy a big house you'd have to keep slaving away for the rest of your life just to pay the property tax. Also bringing in a property tax will be grand if its 1%, but then it will rise when some politiction thinks he needs some new flowers down along the side of the m50. Aren't prop taxes in america not fairly high now? I'd bet they started out low

Fighting Irish

lol @ people wanting more taxes

gurramok

Fighting Irish wrote: »

Because in theory you'd never own your house. If you slaved away for years to buy a big house you'd have to keep slaving away for the rest of your life just to pay the property tax. Also bringing in a property tax will be grand if its 1%, but then it will rise when some politiction thinks he needs some new flowers down along the side of the m50. Aren't prop taxes in america not fairly high now? I'd bet they started out low

Then please explain how services would be paid for your house? (Rubbish, sewerage, water, police, fire brigade, council cleaning on your street/town, repairing roads etc)

Hint: Council tax in the UK is used for the above

Fighting Irish

gurramok wrote: »

Then please explain how services would be paid for your house? (Rubbish, sewerage, water, police, fire brigade, council cleaning on your street/town, repairing roads etc)

Hint: Council tax in the UK is used for the above

Stop wasting money on ramps and use it for the above

blast05

I was responding to blast05's addition of holiday homes into the equation. Having a holiday home is a luxury not an essential. The vast majority do not a holiday home. Services have to be provided to that holiday home on the coast of Galway for example, a tax should be paid by the owner as it costs alot to bring services to that remote holiday home.

Vested interest time ..... i have a holiday home in Mayo - built on family land using my own money (no mortgage), constructed by locals with all materials coming from local companies - in other words investing my money into the local economy. I contributed a few grand to the council as a levee albeit that my house did not necessitate the council to spend as much as 1 cent in road side repairs or anything like that. I paid the ESB €1700 for a connection to the ESB network albeit the labour and material cost should have been more like €200 max. I have my own private water supply. I have my own private sewage treatment system. I avail of the service of a private refuse collection company. I haven't bothered with a landline phone connection.
So what services would the tax you refer to actually be paying for ?

Marginal affect? Don't you realise that mortgages are 35 yr things these days. A tax will have to be paid every year for that property for one months rent. If an investor cannot afford that small sum, they should not be in property.

Ah come on, seriously - dropping rents plus a 1 grand tax for landloards ... do you not realise the consequences of this for all landlords ? I would say that any landlord that purchased their house in the last 6 to 8 years will be making an annual loss on their properties if this comes in ... and this is with interest only mortgages

We agree to disagree. I have issue with BTL's mostly, they are unprofessional.

Surely surely everyone that invests in a 2nd or 2nd hundredth property is a buy to let landlord. What are the other options ? Buy to leave it sitting idle ? And again, as already more or less pointed out by others, your sweeping generalisations just simply do not hold up to scrutiny

lets invest in companies who actually generate wealth.

The banks ? Pharmaceutical companies ? Oil companies ? ....... fine, once you have no moral conerns re where you put your money. And can you honestly tell me that the construction boom do not generate wealth in this country? True that the government completely fcuked it all up in terms of wasting this money (and becoming dependent on these unsustainable taxes)and putting in place the conditions that lead to excessive rate of house contruction and ultimately the property bubble but it can't be questioned that massive amounts of wealth was generated.

gurramok

blast05 wrote: »

Vested interest time ..... i have a holiday home in Mayo - built on family land using my own money (no mortgage), constructed by locals with all materials coming from local companies - in other words investing my money into the local economy. I contributed a few grand to the council as a levee albeit that my house did not necessitate the council to spend as much as 1 cent in road side repairs or anything like that. I paid the ESB €1700 for a connection to the ESB network albeit the labour and material cost should have been more like €200 max. I have my own private water supply. I have my own private sewage treatment system. I avail of the service of a private refuse collection company. I haven't bothered with a landline phone connection.
So what services would the tax you refer to actually be paying for ?

You're a rare breed

You've got family connections to your locality as a holiday home owner. Most do not own family land. They just buy the house as a getaway and only occupy when they get time off work!
You've obviously worked out an efficient way of supporting your holiday home, many have not.

blast05 wrote: »

Ah come on, seriously - dropping rents plus a 1 grand tax for landloards ... do you not realise the consequences of this for all landlords ? I would say that any landlord that purchased their house in the last 6 to 8 years will be making an annual loss on their properties if this comes in ... and this is with interest only mortgages

Not all. My associate who bought in 2002 would not be affected financially by a 1,000 tax, he bought before house prices doubled and is making a bit of money per annum

blast05 wrote: »

Surely surely everyone that invests in a 2nd or 2nd hundredth property is a buy to let landlord. What are the other options ? Buy to leave it sitting idle ? And again, as already more or less pointed out by others, your sweeping generalisations just simply do not hold up to scrutiny

We know what i'm talking about. A huge amount of bubble buyers bought to make money either through capital appreciation by leaving the unit empty or flipping or renting out without a care for the rights of the tenant. They took out interest only mortgages without a damn for the consequences.

blast05 wrote: »

The banks ? Pharmaceutical companies ? Oil companies ? ....... fine, once you have no moral conerns re where you put your money. And can you honestly tell me that the construction boom do not generate wealth in this country? True that the government completely fcuked it all up in terms of wasting this money (and becoming dependent on these unsustainable taxes)and putting in place the conditions that lead to excessive rate of house contruction and ultimately the property bubble but it can't be questioned that massive amounts of wealth was generated.

Why does investing in banks come first to your mind?

I said investing in companies that generate wealth, preferably export based that generate sustainable employment.

With all due respect, but you really don't have a clue. There was no wealth generated by building houses, there was only debt.
Private sector debt is over 400bn, the highest in the EU if not the world. 80%+ of that is mortgage related, that is not wealth. A few developers got rich on the back of selling overpriced houses to mostly young people, they did not generate wealth, we cannot export houses!!

The govt wasted revenue from property sales, yes. They should of not relied on property sales in the first place. Elsewhere in the EU, they rely on mostly property taxes as a portion of their overall revenue to come from property.

We had maybe 17% of property revenue coming from VAT/CGT/stamp duty from sales of houses at the peak in 2006.
In the recent competitiveness report(see thread about it in this forum), the UK was about 15% mostly stable revenue from property in the form of mostly council taxes etc., the rest of the EU the same hence its good that a tax is introduced.

blast05

I said investing in companies that generate wealth

Probably close to 100K was paid to companies that manufacture or provided the materials. This represented generation of wealth in the local economy.

You're a rare breed

You've got family connections to your locality as a holiday home owner. Most do not own family land. They just buy the house as a getaway and only occupy when they get time off work!
You've obviously worked out an efficient way of supporting your holiday home, many have not.

And again, what services should i have to pay for or ultimately why should i have to pay a tax on this house if homeowners do not. If i have to pay a tax on this then equally a tax should be paid on all the other luxury items i mentioned before plus hundreds more.
I'm not quite sure why i am arguing this point as if 2nd homes only are taxed and not principal primary residences then i am better off than if principal primary residences are also taxed
But the question still holds nonetheless. It seems to me that its a case of "you're luckier than i am so you should be taxed ..... regardless of how you got luckier"

P. Breathnach

gurramok wrote: »

With all due respect, but you really don't have a clue. There was no wealth generated by building houses, there was only debt.

It's an odd phenomenon that when people preface a statement by saying "with all due respect" they usually then say something quite disrespectful.

A house is a form of wealth. Building a house benefits many people financially. Living in a house is a benefit to the occupier. Who hasn't a clue?

Anonymous1987

The property tax purpose is to raise revenue to pay for the large government deficit this year. Why not just raise the income tax level to raise revenue? What the government is trying to do is offer a progressive tax that places the burden on those individuals it considers to be wealthy specifically property owners. Unfortunately the problem is a house does not necessarily provide an income particularly if you live in the only house you own. If the government wants a progressive tax why not raise the higher level of income tax and save on the cost of paperwork and bureaucracy with the introduction of an entirely new tax?

All in all the property tax will make life a lot more difficult for property owners especially those who already pay large mortgages on first and second homes and are now faced with an additional cost to bear. Politically it is very attractive as a tax on property owners perceived to be wealthy however in practice it is a method for the government to soften the blow of increased taxation. It makes no difference whether a property is bought for personal living or as an investment, in fact investment properties are necessary for supply in a healthy rental market. Investors are taxed for rental income already when they pay their income taxes and a property tax is simply double taxation. A property tax will just make it more unattractive to invest in new constructions possibly threatening to slow an already devastated and significant part of the economy.

Fighting Irish

gurramok wrote: »

Then please explain how services would be paid for your house? (Rubbish, sewerage, water, police, fire brigade, council cleaning on your street/town, repairing roads etc)

Hint: Council tax in the UK is used for the above

wait are we talking about a once off property tax or a yearly property tax?
I'm talking about a yearly property tax

nesf

Anonymous1987 wrote: »

The property tax purpose is to raise revenue to pay for the large government deficit this year. Why not just raise the income tax level to raise revenue? What the government is trying to do is offer a progressive tax that places the burden on those individuals it considers to be wealthy specifically property owners. Unfortunately the problem is a house does not necessarily provide an income particularly if you live in the only house you own. If the government wants a progressive tax why not raise the higher level of income tax and save on the cost of paperwork and bureaucracy with the introduction of an entirely new tax?

Well that's the traditional argument against property taxes, just because you have a property doesn't mean you have much of a cash flow, the classic example being a pensioner who owns their own home whose monthly income might be very small and wouldn't be in a position to pay any large property tax.

The argument essentially falls down to whether a Government should tax wealth or income. The above pensioner is still a relatively wealthy individual despite their low income because if they sold their home they would realise a substantial gain in cash. So why should this not be taxable? Just because someone's wealth is illiquid doesn't mean that it isn't there etc. One argument comes from putting people in a position where they have to sell their homes and "downgrade" is wrong/immoral/whatever. It really is hard to decide whether or not they are a good idea because both the pro and anti property tax camps have decent arguments I think.


The argument against income taxation is that because it is a marginal tax it disincentivises working or earning a high wage and this is should be avoided if possible. Raising income taxes in the teeth of a recession is always a dodgy move because it can reduce tax revenues by encouraging people to work less or not work at all. A property tax wouldn't necessarily have this effect, though it would cause some hardship.


Edit: I should also add that the deficit is big enough that the Government aren't going to be able to get out of this by just raising income tax by a percentage point or three, which is part of the problem. They need to look at previously unexplored sources of tax as well as increasing the standard ones.

P. Breathnach

nesf wrote: »

I should also add that the deficit is big enough that the Government aren't going to be able to get out of this by just raising income tax by a percentage point or three, which is part of the problem. They need to look at previously unexplored sources of tax as well as increasing the standard ones.

How about a tax on posting to online fora? A variable rate, depending on how annoying the post is.

griffzino

Tax the equity in second homes.

If couple A has holiday home valued at €280K and mortgage of €150K then tax the €130K at 1.5% per year. Bring in €1,950 in tax.

Have a sliding scale.

0.5% for equity less than €50K
1% for €50K - €100K
1.5% for €100-€150K
2% for €150K-€250K
2.5% for €250K-€500K
3% for €500K plus.

If RIP investor B has property asset portfolio of €20M and associated loans of €10M then tax at 3% would bring in €300,000K

Thjis would create work for Auctioneers, Valuers, etc.. An itital valuation would cost circa €100 and present statement from bank would confirm associated loan balance.

Have it implemented in next year and put it in place for 5 years at constant values based on initial valuation. Review after five years.

This would hit those who benefited from the celtic tiger and property price increases. These speculators benefited in the good times and now should be hit in the hard times.

They would all have the rent roll to compensate for the expense.

I would then use some of the funds to create a new tax credit for low-middle income property owners who only have a PDH and are in negative equity.