Rip off 'Development contributions'

mallow

Has anyone else noticed that people building their own houses in Ireland get completely hammered by tax?! In the UK you don't pay stamp duty on a site valued below £125k. Here you pay the punitive non-residential rate, even though, by having planning permission, it's obviously bloody residential! We're treated the same as someone building a factory, or an office building. The first €10k only is exempt - When was the last time you saw a site for €10k?

We pay VAT - the full whack - on every single thing in your house - labour and materials. In the UK, there is a zero VAT rate on construction costs and that applies to self builders too, not just professional builders/developers.

Then on top of all that we're stung with anything from a few grand to €20k or more in 'development contributions'. A lot of people are under the mistake impression that this is for development that you will benefit from in your lifetime. That is not necessarily the case... It only has to be used to benefit someone living somewhere in your county. There is no obligation whatsoever on the Council to ever provide you with mains water, sewerage, decent roads or a school, never mind a playground or two, in return for that money. Nor is there any accountability on exactly what your money paid for. AFAIK, these are treated as 'income' for the council and senior staff get paid bonuses based on the amount we all pay- that's just not right.

What bothers me is that none of this is means-tested and there is no sliding scale dependant on your income. Being able to build a house doesn't make you rich. So a first-time buyer, on a low income, who happens to be building instead of buying a house, gets absolutely no help whatsoever from the government. In stamp duty and contributions alone we will have paid €20k. The only reason this doesn't cause complete uproar, I think, is because we can all stick it on the mortgage. But that's just not good enough. None of us have that kind of money lying around. We have to borrow it, which means that we couldn't afford it in the first place, so we then have to pay double that in interest to a bank over the rest of our lives for the privilege.

Anyone else totally browned off about this? Has anyone thought of doing something about it?

muffler

Moved from Construction & Planning to Accommodation & Property.


Edit: On second thoughts I will leave it here. I read the first part of the post which had to do with stamp duty which isnt what this forum debates.

sydthebeat

mallow wrote: »

Has anyone else noticed that people building their own houses in Ireland get completely hammered by tax?! In the UK you don't pay stamp duty on a site valued below £125k. Here you pay the punitive non-residential rate, even though, by having planning permission, it's obviously bloody residential! We're treated the same as someone building a factory, or an office building. The first €10k only is exempt - When was the last time you saw a site for €10k?

We pay VAT - the full whack - on every single thing in your house - labour and materials. In the UK, there is a zero VAT rate on construction costs and that applies to self builders too, not just professional builders/developers.

Then on top of all that we're stung with anything from a few grand to €20k or more in 'development contributions'. A lot of people are under the mistake impression that this is for development that you will benefit from in your lifetime. That is not necessarily the case... It only has to be used to benefit someone living somewhere in your county. There is no obligation whatsoever on the Council to ever provide you with mains water, sewerage, decent roads or a school, never mind a playground or two, in return for that money. Nor is there any accountability on exactly what your money paid for. AFAIK, these are treated as 'income' for the council and senior staff get paid bonuses based on the amount we all pay- that's just not right.

What bothers me is that none of this is means-tested and there is no sliding scale dependant on your income. Being able to build a house doesn't make you rich. So a first-time buyer, on a low income, who happens to be building instead of buying a house, gets absolutely no help whatsoever from the government. In stamp duty and contributions alone we will have paid €20k. The only reason this doesn't cause complete uproar, I think, is because we can all stick it on the mortgage. But that's just not good enough. None of us have that kind of money lying around. We have to borrow it, which means that we couldn't afford it in the first place, so we then have to pay double that in interest to a bank over the rest of our lives for the privilege.

Anyone else totally browned off about this? Has anyone thought of doing something about it?

these infrastructures NEED to be paid for, so its a simple decision... either raise everyones taxes or find another way.. thus development contributions.
It was a governmental policy to cut funding for local governemnet so they had to find it somewhere.

regarding the tax issue, whatever you think we still live in a low tax society where we paid tax by use rather than by requirement. Therefore either be happy with a high tax society where you pay every week from your hard earned, or be happy with a low tax socitey where you pay as you use.

(im not arguing against you because personally i share may of your opinions, im just giving you the opposite view)

mallow

They did have to raise the money somewhere, I agree. What I don't understand is how not means-testing a one-off payment of up to €20k can be justified.

Here's a quote from a Council website about the Act establishing the development contribution scheme:
[FONT=&quot]'Section 48 of the Planning & Development Act 2000 indicates that Local Authorities should prepare a sound, justifiable, logical, equitable and accountable basis for the determination of financial contributions'[/FONT].

This is the issue. I cannot see how it was ever justifiable to allow Council's to charge, effectively, any sum and to make no distinctions based on the taxpayers means. This is not an asset tax and it is not an income tax. It is some bizarre hybrid. How this can be 'equitable' is beyond me.

Also, this is not a case where you pay as you use. There is no 'use' from stamp duty whatsoever. It is unjustifiable to abolish it for first timer buyers but not for first time buyers of sites who intend to build. The crucial point is that there is also no 'use' from the development contributions. For some there may be, if they are lucky. If you are unlucky there will be none. That is also inequitable.

Nor is the Council in any way 'accountable' as it is supposed to be. You are not entitled to know where your money was spent. Ever. That is not accountability. It's not surprising that people evade taxes when they are blatantly unjust and inequitable.

sydthebeat

there is a distinction. In many counties theres a sliding scale rate of development contributions based on the size of the dwelling. Commercial development contributions are based on a 'per sq m' rate as well.

To be honest, its the difference between counties thats the real sham here. I could build a 5000 sq ft mansion in portarlington (laois) and pay as little as 2000 as development contributions to laois co co, however if i am 1 km futher up the SAME ROAD and build in monasterevan (kildare) i could pay as much as 8000 to 10000 (thats no connection to public sewer!!)

now kildare will argue that over the last 15 years a huge amount of pressure has been put on their infrastructure due to urban sprawl from dublin etc.... so they have charge accordingly.


The following are the rates of stamp duty which apply to sites and land in Ireland:ValueDutyup to €10,000 1%
€10,001 to €20,000 2%
€20,001 to €40,000 3%
€40,001 to €70,000 4%
€70,001 to €80,000 5%
€80,001 to €100,000 6%
€100,001 to €120,000 7%
€120,001 to €150,000 8%
€151,001 and over 9%

If sites were not so over valued then there would be no issue. I think its about time the value of sites dropped drastically to around the 80-100K mark.

stamp duty is exempt for first time buyers, or buyers of second hand homes under 125sq m.

mallow

What I said was
'I cannot see how it was ever justifiable to allow Council's to charge, effectively, any sum and to make no distinctions based on the taxpayers means.'

You're talking about a distinction based on the size of a property and I know that that is the basis. But this is not a distinction based on means. Two people could both build a 3,000sq.ft. house, one for €1m and one for €50k per sq. ft = €150k. There is no justifiable reason for basing development contributions on size of property rather than means. Commercial development should always be treated separately and differently to residential development.

It's not unusual to get a half acre site for €80- €100k. I agree sites are overvalued and will come down. But, the SD rates you refer to all for all non-residential property. The cost of a site will never be as low as the cost of agricultural land. It makes absolutely no logical sense to treat a site, with planning permission, as non-residential.

Finally, your point about SD is incorrect. It is a common assumption that FTB's are exempt from stamp duty when they buy a site. That is not the case. No distinction is made for FTB in that scenarion whatsoever. You are also incorrect about SD for FTB's of second hand houses. SD for FTB's was abolished completely earlier this year.

sydthebeat

mallow wrote: »

Finally, your point about SD is incorrect.

1. It is a common assumption that FTB's are exempt from stamp duty when they buy a site. That is not the case. No distinction is made for FTB in that scenarion whatsoever.

2. You are also incorrect about SD for FTB's of second hand houses. SD for FTB's was abolished completely earlier this year.

1. i never mentioned sites.

2. http://www.daft.ie/content/stampduty.daft?gclid=CJGkmaWo75UCFRaIlAodPn2neA

is this information incorrect?? its what i have been led to believe is the case, perhaps i am misinformed?

"New Homes

First-time buyers do not have to pay any stamp duty on new homes. "

Second hand homes

First-time buyers do not have to pay any stamp duty on second hand homes.

Owner occupiers and Investors pay stamp duty at the following rates:

Property ValueRateUp to €125,000ExemptNext €875,0007%Balance9%

mallow

Sorry, I misread your post. I thought you were saying that FTBs had to pay SD on second hand houses and that they were exempt when buying sites. Outrage really clouds your brain!

muffler

What are we discussing here lads development contributions (as per thread title) or stamp duty. Its one or the other.

lignum

I was listening to Matt Cooper this evening and they were talking about the Auditor General's annual report, apparently most of the Development Contributions have remained unspent. I think the figure was around 1.3 BILLION.
It seems that the councils are just raking in the money and not providing any infastructure or services.

Soldier

hi mallow

I agree the government have their hands in your pockets all sides. i bought a site and got caught for 11 thousand stamp duty and i lost my first time buyer!!!?????? Hellooooo how the hell does that make sense ya you pay the stamp duty as a first time buyer but lose your first time buyers as well. My blood is still boiling over it.

muffler

Fuck this. Some people just cant read a mods instructions. The thread WAS about development contributions but most are hell bent on derailing it.

Its either infract/ban people or lock the thread so I'll let you all off by doing the latter.