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Niall Carson
lpt reform

More homeowners will have to pay property tax if government decides to scrap exemption

The Taoiseach said it is unfair that some pay while others do not.

HOMEOWNERS WHO DO not currently pay local property tax may have to in the future under new plans due to be considered by government next year. 

Under the current rules, homes that were bought in 2013 do not have to pay LPT. 

Properties purchased in 2013 are exempt until the end of 2019, as are properties that were self-built in that year.  

New and previously unused properties purchased from a builder or developer between 2013 and 31 October 2019 are also exempt until the end of 2019. 

However, Taoiseach Leo Varadkar said next year the government will consider removing these exemptions.

He also wants to see more of the property tax collected in each county going to each local authority.

Going into more detail with reporters about the removal of the exemption, Varadkar said the “we will have to consider this in the new year” stating that it is not fair that some householders pay and others do not.

“That is not fair because they benefit from the same local services as everyone else. That was done for a particular reason in 2013 to encourage increased housing supply but that is now going in the right direction. So we need to consider that and it will bring in extra money for local authorities,” he said.

Where the money goes 

“The other thing we are certainly looking at is reforming the property tax to ensure that all of the money you pay goes to your local authority. At a moment in urban local authorities and a few of the wealthier counties about 20 per cent gets diverted to less well-off counties and we think there is a better way to do that,” said the Taoiseach.

He said there would still need to be “an equalisation fund” to make sure those less well-off counties, particularly those down the western seaboard, don’t lose out, but he added: 

“I think people would prefer to see the actual tax they pay going to their own local authority.”

The main thing the government wants to avoid is “anyone facing a significant increase in their property tax… we just don’t want that to happen”.

“I know people feel that because house prices have gone up a lot since in the last four or five years that it means their property tax will go up by that amount. We are going to make sure that doesn’t happen.

“We want to make sure that the amount of revenue collected by the local authorities from property tax is roughly the same and that would mean making sure nobody faces a sudden increase in their property tax. That would not occur until 2020 at the earliest in any case,” he said.

Changes to the system 

Earlier this year there was a lot of talk about the possible changes to Ireland’s property tax when Housing Minister Eoghan Murphy signalled he favours a new calculation of the tax.

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.

In 2015, the LPT being paid by homeowners was frozen until 2019, meaning that people whose properties had increased in price or had been improved still only had to pay the same rate of tax that they have since the original LPT valuations in 2013.

Next year another round of valuations are due, but because house prices have been constantly rising in the past several years, politicians are concerned that the LPT will rise dramatically when the valuation date of March 2013 is to be reviewed by the government. 

Just this month, questions hung over whether the long-awaited overhaul of the property tax system would be delayed with The Sunday Business Post reporting that Minister for Transport Shane Ross was demanding that pensioners and people with disabilities be exempt from the charge.

TDs in all parties are concerned about the hefty increases that could be imposed on householders as a result of a review of the tax, particularly due to the fact that any increase in the property tax will coincide with the local elections, meaning it will be a hot issue on the campaign trail for councillors around the country.

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