A LOCAL PROPERTY tax surcharge for vacant properties could be included in legislation to come before the Dáil before the summer recess.
The Journal reported last month that Finance Minister Paschal Donohoe has been asked to consider whether a multiple of the Local Property Tax (LPT) for apartments that are left vacant could be used to deter institutional landlords from leaving properties lying idle, senior sources confirmed.
Tánaiste Leo Varadkar, in a letter to the Fine Gael parliamentary party, said that it might be time for the Government to re-examine a vacant home tax.
It is understood that there is a push to include such a provision in the legislation governing the new changes to the local property tax system, which are due to be announced today.
The proposal for a local property tax surcharge is believed to have gotten a “good response” so far from the finance minister, as well as those in Fianna Fáil and the Green Party.
Such a measure could see triple or quadruple levels of the Local Property Tax kicking in for houses or apartments that have been vacant for more than six months or 12 months.
Landlords would have to self declare their vacancies, it is believed.
Sources state that there would also be a number of exceptions, as some within government are wary of such a tax hitting property owners who might have their home vacant if they are abroad, or own holiday homes or other examples whereby the measure could hit non-investment fund property owners.
They were confident the measure could get over the line given the cross-party support.
Local Property Tax changes
The Heads of the Local Property Tax Bill 2021 was approved by Government at the Cabinet meeting yesterday.
Ministers signed off on proposed changes to the local property tax system which will see homes built since 2013 no longer being exempt from property tax.
It was confirmed today that all homes are to be revalued in November under plans to bring tens of thousands of homes built in recent years into the property tax net.
The finance minister confirmed that bills will be landing in the post in the early part of next year.
Currently, property tax is based on the market value of a house, but due to the rapid increase in house prices, there have been concerns about the massive leap in tax homeowners will have to pay.
Donohoe said yesterday that a number of band and rate changes were approved by Cabinet, which would result in no change for some homeowners or an increase of €90 for the majority.
The changes are understood to mean that homes with property values that have increased by 75% will pay more tax.
It is understood that 11% of homes will see a decrease in LPT, while 53% of homes will see no change in the LPT.
The minister is set to announce that 33% of homes will see an increase of up to €100 by moving up one band, while 3% of homes will see an increase of up to €200 by moving up two bands.
Changes will also be made to the equalisation fund in 2023 and 2024 to ensure that the local property tax raised in an area is spent in the locality.
Government will provide the equalisation funds through the Exchequer to ensure that no local authority faces a shortfall.
‘Bite the bullet’
The annual Local Property Tax (LPT) applies to all residential properties in the State.
The tax came into effect in 2013 and is collected by the Revenue Commissioners. Basically, if you own a residential property, you are liable for payment of the tax.
When it was first introduced, there were mass protests against the new tax, particularly due to the timing, as Ireland was right in the middle of the recession.
In 2015, the LPT being paid by homeowners was frozen until 2019, meaning that people whose properties had increased in price still only had to pay the same rate of tax that they have since the original LPT valuations in 2013.
Another round of valuations was due to take place in 2019, but because house prices have been constantly rising in the past several years, politicians were concerned that the LPT would rise dramatically, and the can was kicked down the road.
While it is expected to be a thorny issue for government over the next couple of weeks, government sources said they had to “bite the bullet” given that over 100,000 properties are not paying any LPT.
To embed this post, copy the code below on your site
have your say