Property taxes and charges

marykellyeire

If any of you have a second property that is rented out you might be interested in this.
A few of us have got together to lobby the government in relation to all the charges and additional taxes that have come into force in relation to property.
Since April 2009 only 75% of interest relief on borrowings can be written off. This may mean that you
have to pay tax on thousands more each year in addition to property charges, levies etc..
For example, if you have a €400,000 mortgage with a 30-year term you would now have to pay tax on approximately €5,000 extra per year (based on interest rates in 2008). As interest rates were extremely low this year the tax due would be less; however, as soon as interest rates start rising again this figure will increase significantly.
The letter that we are sending to local TDs is below. Feel free to edit it as you see fit and forward it to your local politicians. The first link below gives a list of all the current TD's email addresses.
http://www.oireachtas.ie/viewdoc.asp?DocID=12684&&CatID=138
It is much more effective to send a letter to your local TDs if possible as emails are not given as much significance. Each TD is listed on the second link below including party and constituency details. Click on the individuals name to get their mailing address.
http://www.oireachtas.ie/members-hist/default.asp?housetype=0&HouseNum=30&disp=mem
Letter:
I am writing to you as an Irish tax payer who like thousands of others in this country bought a second property as a savings mechanism and an alternative to a pension. This was a course of action that was actively promoted and encouraged over the last few years by the current government and its representatives. Investments were made based on tax laws at the time which have now, as of April 2009, been reversed. This will cause financial ruin for many of the thousands that invested.

Many owners of residential investment property are in negative equity in their properties following the fall in the residential property market. With reported drops of up to 50% many will never see their properties rise to positive equity and will be forced to sell at huge losses as they can’t continue to meet mortgage repayments, increased taxes, and property charges. A reduction in rental rates and rent supplements, €200 property tax, and legal requirements for BER certificates and new housing standards have all added to the financial costs which must be borne by the property owner. Loans of up to 100%, made easily available in recent years, have resulted in huge amounts of debt on properties, making people extremely reliant on rental incomes to meet the mortgage repayments.

This means any reduction in the interest write-off allowable is extremely unjust. The current reduction to 75% has resulted in income tax becoming due on many properties even though a rental loss occurred after interest payments were made. People are being forced to pay tax on a legitimate business expense. As a citizen of this state I am more than happy to pay tax on investment profits; however, I feel it is entirely unjust and inequitable to have to pay tax on losses, especially when the 100% interest relief was taken into account when purchasing.

We need to revert to the 100% interest relief on borrowings in order to have a fair and just taxation system in this country. If not, the current property charges and unfair taxes will ruin many property owners and cause widespread defaults on mortgages leading to bank foreclosures and further instability.