Property Tax in new budget

Pkiernan

Am I seeing things right?

Is the govt imposing an annual property tax of 1% on the value of the home on all residential properties?

If so, where do they expect people to get the money from?
Landlords will have to up the rent on their tenants to help pay this tax too, I would imagine.

Or am I getting confused with Stamp Duty??

Cathmandooo

You're getting confused with stamp duty.

I don't think they've announced the property tax yet...

am i bovvered

I heard the Stamp duty that is being reduced to 1% on purchases up to 1,000,000 and 2% over that.
I did not hear about the impending prop tax.

Pkiernan

Thank the Lord for that!!

One other point in the Property Section of the budget is the partial abolition of the Section 23 Tax relief. The tax relief used to apply to rental income earned on any property.

From Jan 1st, it will apply only to the rent earned on the property itself.
Additionally the relief will not transfer with the property if it is sold.

Not sure how this change is legal, and it will leave a lot of Section 23 landlords in trouble, and further depress their property prices.

Victor

Pkiernan wrote: »

Not sure how this change is legal,

How wouldn't it be legal?

and it will leave a lot of Section 23 landlords in trouble,

Somewhat balancing the budget is more important

and further depress their property prices.

Not necessarily a bad thing.

Pkiernan

Victor wrote: »

How wouldn't it be legal?
Somewhat balancing the budget is more important
Not necessarily a bad thing.

It is a retro active change in legislation that effectively abolishes Section 23 tax relief.

Section 23 tax relief was specifically offered by the Government to encourage builders to build when there were not enough properties.

It was effectively asking investors to take a chance, and guaranteed them that if they did they would benefit via tax relief. The government has now broken the agreement, and may well have done so illegally. This could well be challenged in the Courts if enough bigger investors decide to fight it.

Additionally the Section 23 relief will not transfer with the property if sold, thereby deflating the price and further hurting those who effectively invested (with Government approval) in our infrastructure.

The balancing the budget issue is a much wider issue, and imo should be addressed by cutting out the fat in the civil service - laying off at least 25% of our bureaucrats would be a good start!

Telpc

I agree that this could be challenged in the courts, and I also hope that it is successfully challanged as it will seriously affect me personally.

Like a number of small business owners, I was advised some time ago to invest in a section 23 property so that the tax relief could be used to offset rental income from commercial premises rented to the business. Without the tax relief, the commercial premises would have been unaffordable. So, having being given a guarantee of tax relief, we could plan for this purchase knowing the payments would be affordable for the 10 years of the relief.

Having a premises means that we could then employ staff, and therefore contribute further to the economy. Should this measure be unsucessfully challanged, we will have no option but to let staff go so that additional money can be found to pay for the premises. Well done FF, more job losses.

I feel that we have been completely hung out to dry by this budget measure, and even mis-sold property based on this relief which is now being withdrawn with 3 weeks notice !!!

Look, I understand that additional revenue needs to be raised by the Government, but at least give us a chance to put other measures in place so that we can try to keep people working - pushing this through in such a fashion can and will cripple some small businesses like our own.

My 2 cents...

Victor

Pkiernan wrote: »

It is a retro active change in legislation that effectively abolishes Section 23 tax relief.

They promised relief at the marginal rate. So, they reduce the marginal rate to 0%.

Jo King

It can't be illegal. The Finance Act will be voted through the DAil. It might be challenged on constitutional grounds. The basis of the constitutional challenge would likely be that it represents an arbitrary and unjust attack on property rights. A constitutional challenge would be a costly business.