€200 propety tax for second homes

Dannyboy83

I was just looking at this article which predicted unemployment would reach 400,000 by the end of 2009:
http://www.independent.ie/national-news/jobless-total-to-hit-400000-after-worst-year-in-history-1597835.html
As far as I know, we're already significantly over that figure, are we not?
And thats in spite of thousands of (former) immigrants fleeing the country.


Then I was looking at the ECB interest rates:
http://www.rte.ie/news/2009/0903/ecb.html
Currently 1% and still many average homes are out of the reach of the average worker on an average salary.


This got me thinking about the property tax for second homes.
The tax is only €200.
But its clear, that anyone buying a house in Ireland in the next few years must be a bit kamikaze or expecting massive profits in the future.
We're in the bull trap right now it seems. And interest rates are at 1%.

So even a house which has suddenly become affordable now for the average punter, is going to be utterly unaffordable in 5 or 10 years when the ECB jack up their interest rates.


Would it not make more sense to have a €2000 property tax, rather than a €200 property tax?
This might 'encourage' people to sell homes that they don't need or occupy and prices might recorrect themselves to realistic levels. It might get the ball rolling again.

When you think about it, the average smoker pays €3000 per year in tax.

toiletduck

Dannyboy83 wrote: »

This might 'encourage' people to sell homes that they don't need or occupy and prices might recorrect themselves to realistic levels. It might get the ball rolling again.

Umm, who's buying now? And to such a level that all the second homes in the country would be snapped up?

yoshytoshy

Is this €200 tax ,on investment property aswell ?

Dannyboy83

toiletduck wrote: »

Umm, who's buying now? And to such a level that all the second homes in the country would be snapped up?

Thats my point.
Property is still exceedingly overvalued.

If there were some incentive for realistic corrections/re-evaluations, banks could start lending less risky sums of money and a whole load of *average earning* first time buyers would stop waiting for *average* property to become affordable and make a move.


I guess it will have to happen sooner or later anyway, but perhaps it would be better to get the ball rolling when we're 30billion in the red, rather than 130billion in 3/4 years time.

Dannyboy83

yoshytoshy wrote: »

Is this €200 tax ,on investment property aswell ?

Thats correct as far as I understand it anyway mate.

I think its specifically designed to target investors or people who are making a profit from letting property, whereas those just hanging onto it and not making a profit may not have to pay anything.

Kalashnikov_Kid

Dannyboy83 wrote: »

Thats my point.
Property is still exceedingly overvalued.

If there were some incentive for realistic corrections/re-evaluations, banks could start lending less risky sums of money and a whole load of *average earning* first time buyers would stop waiting for *average* property to become affordable and make a move.


I guess it will have to happen sooner or later anyway, but perhaps it would be better to get the ball rolling when we're 30billion in the red, rather than 130billion in 3/4 years time.

Not the policy of Fianna Fail - The Property Development Party, im afraid

Hootanany

I have trying to sell my holiday home for 2 yrs now am i liable to pay this also

Dannyboy83

Kalashnikov_Kid wrote: »

Not the policy of Fianna Fail - The Property Development Party, im afraid

Yes, you're probably correct tbh.

A friend of mine from Italy told me that they have had taxes on second property for years, something like €1000 per additional property.

Dannyboy83

Hootanany wrote: »

I have trying to sell my holiday home for 2 yrs now am i liable to pay this also

Yes, thats correct, holiday home owners are also liable as far as I'm aware.

If you don't mind me asking, why have you been unable to sell it for 2 years?

Hootanany

Dannyboy83 wrote: »

Yes, thats correct, holiday home owners are also liable as far as I'm aware.

If you don't mind me asking, why have you been unable to sell it for 2 years?

Its rather large and has 16 acres

yoshytoshy

Its seems to be a bit of a tight rope ,introducing taxes like these .If it's too high and people start to default ,the banks are in the sh*t and therefore the taxpayer is in the sh*t.

Don't think the housing market can take another flood of houses ,it might kill the banks here altogether

jimmmy

The country needs all the investment it can get. It needs people to invest in holiday homes here, rather than abroad. I know a lot of college lecturers, teachers etc back after long summer holidays abroad....if these people had spent their money in Ireland during the summer then the money ( food, drink electricity, services ) would have been kept circulating in Ireland. Who would invest in a second home in Ireland now....very few are, that is why stamp duty, taxes etc have collapsed and the country is in such a mess. Few people will pay the 200 euro tax anyway, ( especially when they see how the govt squanders the money on itself ) and the cost of collecting will exceed its worth. How many people pay their tv licence either ? As most people know, government expenditure should be reduced .... you cannot tax your way out of the recession. The govt increased vat by .5% and realise / admit it was wrong ....it sent everyone across the border. The UK reduced their vat instead.

OldJay

Dannyboy83 wrote: »

This might 'encourage' people to sell homes that they don't need or occupy and prices might recorrect themselves to realistic levels. It might get the ball rolling again

How so? If more people are encouraged to sell, prices will drop as scarcity lessens.

Dannyboy83

Justind wrote: »

How so? If more people are encouraged to sell, prices will drop as scarcity lessens.

Yes.
Thats the point I'm trying to make.

A Lower quantity of overpriced second homes (and third,fourth,fifth) means a greater quantity of realistically priced first homes.

And a greater quantity of realistically priced first homes ought to result in a greater quantity of first time buyers, mortgages and economic stimulation.

The market is going to correct itself eventually anway, no matter now many NAMA style schemes the Irish government try to implement. But its better sooner than later.

Dannyboy83

jimmmy wrote: »

The country needs all the investment it can get. It needs people to invest in holiday homes here, rather than abroad. I know a lot of college lecturers, teachers etc back after long summer holidays abroad....if these people had spent their money in Ireland during the summer then the money ( food, drink electricity, services ) would have been kept circulating in Ireland.

I agree with your point, but I think its asking for the impossible.
I'm only 26 and I've already seen everything there is to offer in this country. Twice, lol.:D
College lecturers, teachers & co. will probably be able to afford to go to Tenerife for 2 weeks rather than Tipperary.

Ireland doesn't have the weather like Spain, doesn't have theme parks like Alton Towers in Wales and (I think) has too much of a business feel to ever really relax here.
Ireland doesn't really have that much compared to other cheaper destinations, other than the culture & food/drink which isn't appealing if you already live here 50 weeks of the year.

Who would invest in a second home in Ireland now....very few are, that is why stamp duty, taxes etc have collapsed and the country is in such a mess.

I agree, I was referring to first time buyers. Sorry, this doesn't seem to have been very clear in my initial post.

Besides, I would hate for us to go back down the silly route of selling investment homes to each other anyway and creating another bubble. Holiday homes probably should be advertised to foreigners only.
What Irish person would be silly enough to invest in a 2nd property here now?

It would be better if the market was regulated like in Germany.
Although the word "regulate" seems to be rather tinny to the Irish Government, rather than woody.

Few people will pay the 200 euro tax anyway, ( especially when they see how the govt squanders the money on itself ) and the cost of collecting will exceed its worth. How many people pay their tv licence either ? As most people know, government expenditure should be reduced .... you cannot tax your way out of the recession. The govt increased vat by .5% and realise / admit it was wrong ....it sent everyone across the border. The UK reduced their vat instead.

Well, people paying the tax or not is a matter for the revenue. They already have some very harsh terms for non-payment such as 10% increase per month of non-payment, with the fines attached to the property rather than the owner (deterring any potential buyers).
Its supposed to be increasing from €200 to €400 next year anyway.

About the point about taxing your way out of a recession, I agree entirely. I was just reading about the parking levies in Dublin on private individuals. They are going to fine companies who don't tax thier employees €3000 per employee/space.
But anyway, this tax would be more about stimulating the market and price corrections, than the actual capital gained.

OldJay

Dannyboy83 wrote: »

Yes.
Thats the point I'm trying to make.

A Lower quantity of overpriced second homes (and third,fourth,fifth) means a greater quantity of realistically priced first homes.

And a greater quantity of realistically priced first homes ought to result in a greater quantity of first time buyers, mortgages and economic stimulation

You seem to be dividing the residential property market into two parts. A first home market and an investment home market with both being seperately priced.
This does not portray the housing market realistically in my view. Aside from a commercial property market, there is just one property market that buyers participate in.
I don't see what you are basing your price differentiation on. If homes are "realistically priced" it makes no difference whether or not they are first or investment properties. And a property tax of €200 or €2000 will make no difference to this.

jimmmy

Dannyboy83 wrote: »

College lecturers, teachers & co. will probably be able to afford to go to Tenerife for 2 weeks rather than Tipperary.

I know many of the above who have holiday homes abroad....they should be encouraged to invest in Ireland and keep the money circulating here, rather than spending it abroad. There are enough taxes here ( eg stamp duty ) without another property tax encouraged people to take capital out of the country.....the more this happens the more prices crash, and the more the banks and govt tax receipts are in trouble...

OldJay

jimmmy wrote: »

I know many of the above who have holiday homes abroad....they should be encouraged to invest in Ireland and keep the money circulating here, rather than spending it abroad. There are enough taxes here ( eg stamp duty ) without another property tax encouraged people to take capital out of the country.....the more this happens the more prices crash, and the more the banks and govt tax receipts are in trouble...

Your supposition that people buy holiday homes abroad because of taxation in Ireland, I would say is flawed.

The biggest factor, in my humble opinion anyway, is that the weather is entirely dog-rough. Face it, its a cacky climate here that delivers a pathetic excuse for a summer on an annual basis.

I've a house in Australia because I didn't want to sell when I left (I'd been living there for some years). Nothing to do with taxation. I'm buggered if I ever buy a 'summer' house on this island.

The second homes you allude to tend to be investment properties rather than holiday properties anyway.

nesf

Justind wrote: »

The biggest factor, in my humble opinion anyway, is that the weather is entirely dog-rough. Face it, its a cacky climate here that delivers a pathetic excuse for a summer on an annual basis.

It was also "trendy" to have a house abroad.

Dannyboy83

Justind wrote: »

You seem to be dividing the residential property market into two parts. A first home market and an investment home market with both being seperately priced.

The residential property taxation is already divided into two parts.

A) First Home owners (Primary residences to clarify) are not be obliged to pay property tax (yet)

Investment or holiday home owners (secondary residence) owners are obliged to pay property tax.

This does not portray the housing market realistically in my view. Aside from a commercial property market, there is just one property market that buyers participate in.

Thats where the problem for first time buyers has arisen from, but there has always been some differentiation, with regard to range, stamp duty etc., simply not enough.

As it stands the average home is not affordable for the average worker.
Until this situation corrects itself, this country will continue to suffer.

I don't see what you are basing your price differentiation on. If homes are "realistically priced" it makes no difference whether or not they are first or investment properties. And a property tax of €200 or €2000 will make no difference to this.

Thats the crux of the issue.
Homes are not realistically priced and depending on Nama, won't be for some time, it will be a slow fall.

A property tax will make a difference because an investor will be willing to settle for a lower (more realistic) price. This will get the ball rolling.

I'm guessing that investors are going to be bailing out in droves in the short term future as ECB interest rates climb to 10%. The economic immigrants have already left Ireland in the thousands, and still more are leaving, as there are no jobs anymore.
There is talk that 3rd level students will be paying their own fees in the near future.

in 2011, Investors are gonna be very lucky to find anyone to rent their property, and rental yield is going to be 50% of what it was in 2007, while mortgages will be 200% of what they were in 2007 as the interest rates rise. And Ireland will be €100 billion in the red.

Dannyboy83

nesf wrote: »

It was also "trendy" to have a house abroad.

It was also affordable.
€35k for a cottage in Crotia or €335k for a shoebox in Ireland.

Screw fashion, I know which one I'd pick:D

jimmmy

Justind wrote: »

Your supposition that people buy holiday homes abroad because of taxation in Ireland, I would say is flawed.

Its not the only reason of course....people buy properties in different locations / countries for all sorts of reasons...but the point is people should be encouraged to invest in Ireland and keep the money circulating here, rather than spending it abroad. If the govt is greedy and tries to impose further taxes on those who have already or are considering investing in Ireland, that will have a very negative effect, far outweighing the paltry amount that will be collected. As I said, there are enough taxes here ( eg stamp duty ) without another property tax encouraging people to take capital out of the country.....the more this happens the more prices crash, and the more the banks and govt tax receipts are in trouble... Look what happened when the govt put up vat here....and the uk govt put it down. The savings to be made are cutting public expenditure, not more taxes.

Joey the lips

Brilliant! That should help the already over inflated property market by adding a few more houses to the "For sale" bunch!

cyclopath2001

jimmmy wrote: »

but the point is people should be encouraged to invest in Ireland and keep the money circulating here, rather than spending it abroad. .

That might be correct for financing a factory that would make goods that we would then sell abroad and bring in foreign income.

The last thing we need is to re-start dependency on building activity.

A foreign investment property is more likely earn foreign income than a local one.

jimmmy

cyclopath2001 wrote: »

The last thing we need is to re-start dependency on building activity. .

nobody mentioned " re-start dependency on building activity " !!! lol

cyclopath2001 wrote: »

A foreign investment property is more likely earn foreign income than a local one.

And that income will stay abroad too, and not only that but entice people out of the country to spend their disposable income there ( eg some college lecturers / teachers I know who go abroad to spend their holidays in their holiday apartments + holiday homes abroad )

cyclopath2001

jimmmy wrote: »

nobody mentioned " re-start dependency on building activity " !!! lol

So when you said, that "the point is people should be encouraged to invest in Ireland and keep the money circulating here, rather than spending it abroad", you didn't mean 'invest in building holiday homes in Ireland'?

jimmmy wrote: »

And that income will stay abroad too

How so?

jimmmy wrote: »

, and not only that but entice people out of the country to spend their disposable income there ( eg some college lecturers / teachers I know who go abroad to spend their holidays in their holiday apartments + holiday homes abroad )

Ah, so your problem is with public-sector workers who take foreign holidays. I get it.