Property tax exemption

tsoparno

Large stamp-duty bills may exempt some from new property tax - report

Saturday, April 07, 2012 - 10:29 AM

People who paid large amounts of stamp duty during the boom years may be exempt from paying the new property tax, according to reports.

The report in today's Irish Times says it is understood the Government is awaiting the recommendations of an expert report on how best to implement a fair property tax, which would replace the household charge.

The new property tax is due to be introduced next year.

Finance estimates show that in 2006, for example, the exchequer collected more than €1,300m on residential property alone.

Junior Finance Minister Brian Hayes told the newspaper there should be an acknowledgement that many people who bought houses and apartments in the middle of the last decade had generally paid very high stamp duty bills.

It is believed the Government is considering exempting those who paid stamp duty from paying the property tax for a period of time.

Read more: http://www.irishexaminer.com/breakingnews/ireland/large-stamp-duty-bills-may-exempt-some-from-new-property-tax--report-546603.html#ixzz1rMJBHype



From The Examiner today, is it a suggested waiver for the wealthy or who defines LARGE, should that not be relative to income?

Slydice

Wow, what a coincidence.

They use the keyword "May" and that's co-incidentally when the big EU Referendum is on.

Bullseye1

I'm sure those who paid close to a million and over will be relieved.

tsoparno

Slydice wrote: »

Wow, what a coincidence.

They use the keyword "May" and that's co-incidentally when the big EU Referendum is on.

Ha, subliminal eh.

ArmaniJeanss

I'm confused with the stamp duty issue.

Why doesn't the same logic (talk of a potential exemption from HouseHold Charge) apply to those who bought newbuilds and paid a big chunk of VAT?
VAT on new builds is at the higher rate so between 19.5 and 22% on anything bought in the last decade.

So in practise the first time buyer buying a newbuild was actually paying more into the states coffers than if they'd bought a second hand house and paid 7% or 8% stamp duty.

Yet the stamp duty is regarded as an issue worthy of consideration, but the newbuild VAT never gets a mention.

Cookie_Monster

I don't see why they should gain any exemption. It's a transaction tax versus an ownership tax, nothing remotely comparable about them

View

Cookie_Monster wrote: »

I don't see why they should gain any exemption. It's a transaction tax versus an ownership tax, nothing remotely comparable about them

Probably a lot of TDs paid stamp duty and now want to reduce their ownership taxes.

ArmaniJeanss

Cookie_Monster wrote: »

I don't see why they should gain any exemption. It's a transaction tax versus an ownership tax, nothing remotely comparable about them

Is this post in response to my post #5? Not sure.

If so then I honestly don't see the difference between the transactions.

Purchaser A, The buyer of the second hand house paid a sizeable sum of money into the exchequer via stamp duty, but had no VAT requirement.
Purchaser B, The (first time) buyer of a newbuild avoided stamp duty, but paid a big amount via VAT into the exchequer.

Why is purchaser A potentially considered worthy of a special exemption re HHT, but not purchaser B?

thebman

I think you will find it is a vote saver attempt.

We'll try to avoid making people that paid stamp duty will turn into we tried but it was unworkable just after the referendum.

n97 mini

Stamp duty is one of the most inequitable of all taxes, and some people were screwed by it just for trading up at the wrong time, as the rates were constantly being fiddled with.

First time buyers didn't pay any, and people who bought sites and spent a fortune on a big house only paid it on the site, or didn't pay it at all if the site was a gift or inherited.

Even though I have never paid stamp duty I wouldn't have an issue with those that did getting a rebate against property tax to bring their effective stamp duty down to the current rate.

Cookie_Monster

yes you're right, stamp duty was a ridiculous and unfair tax. We need a proper property ownership tax (rates, for want of a better term) that's in the 1,000s per annum for the system to be properly workable. (then scrap tv licence, water rates, bins charges etc)

max 73

What about people who didn't pay stamp duty but are struggling????

Amirani

max 73 wrote: »

What about people who didn't pay stamp duty but are struggling????

We'll allow them to pay no taxes then if they're struggling. A condition of this can be that they receive no public services. Perfect scenario surely.

If people overpaid for a mortgage during the boom time then they need to deal with the consequences for that. If people have lost their job and can't pay their rent then they need to downsize where they're living and what they're spending. The irony is that the people who complain most about taxes are also the ones who receive most benefit from them.

ArmaniJeanss

n97 mini wrote: »

First time buyers didn't pay any, and people who bought sites and spent a fortune on a big house only paid it on the site, or didn't pay it at all if the site was a gift or inherited.

By newbuild, I didn't mean a one-off house on a bit of land.
I was thinking more of the 700+ unit estates that sprung up in D15 and D22.

I know that on my block in an estate in D15 that ten of my fourteen neighbours are time buyers and thus didn't pay stamp duty.
The estate is over 500 dwellings in total and I'd suspect the first-time-buyer ratio is quite constant.

Yet every one of those purchasers paid VAT of around €25000 on their purchase.
Meanwhile the person trading up to a nice 50 year old red brick in Ringsend paid maybe €10K or €15K Stamp Duty, but paid no VAT at all.

And yet the campaign for exemptions seem to be centred solely on the second purchaser.

By the way I personally don't think their should be an exemption for either.

n97 mini

NiallSparky wrote: »

If people overpaid for a mortgage during the boom time then they need to deal with the consequences for that. If people have lost their job and can't pay their rent then they need to downsize where they're living and what they're spending.

What you're saying is people need to emigrate, as they will never have any hope of covering the negative equity they now face if they stay.

ArmaniJeanss wrote:

By newbuild, I didn't mean a one-off house on a bit of land.

I wasn't addressing you at all. Your points on VAT are valid, but some people were doubly screwed with VAT and Stamp Duty.

Manach

Shrink the government and the entitlement mindset, sure. But I don't think a Labour government will be too keen on these "services" that are being pushed.

Amirani

n97 mini wrote: »

What you're saying is people need to emigrate, as they will never have any hope of covering the negative equity they now face if they stay..

No. I mean people who rent should that have lost their job should move to a smaller apartment with cheaper rent.

thebman

NiallSparky wrote: »

No. I mean people who rent should that have lost their job should move to a smaller apartment with cheaper rent.

Yeah people who rent should move and people who bought houses they couldn't afford should get bailed out...

n97 mini

NiallSparky wrote: »

No. I mean people who rent should that have lost their job should move to a smaller apartment with cheaper rent.

Sorry, I quoted a bit too much.

NiallSparky wrote: »

If people overpaid for a mortgage during the boom time then they need to deal with the consequences for that.

The consequences of buying a house during the boom are put up with it if you have a job, or let the bank/ergo the tax-payer take the hit if you don't.

Amirani

thebman wrote: »

Yeah people who rent should move and people who bought houses they couldn't afford should get bailed out...

I said nothing about any bailout?

Dannyboy83

The Fianna Fáil spokesman added: “The full property tax is going to be political dynamite in 2013, and the reality is that many ordinary people could be facing property tax bills of €500 and more.”

However, Sinn Féin’s Pearse Doherty said the whole notion of a property tax as well as the current household charge should both be scrapped. “Any waiver system must be based on people’s ability to pay, not on the level of stamp duty paid in the past,” he said.

The proposed exemption from property tax for those who paid stamp duty at the height of the market could mean “a windfall in tax relief for high earners and owners of very large properties,” he said.

Previously, Minister of State for Finance Brian Hayes has said it would be premature to speculate about the content of the anticipated report of the expert group which has been tasked with bringing recommendations to Government on implementing an “equitable” property tax to replace the contentious household charge.

However, Mr Hayes said there should be an acknowledgement that many people who bought houses and apartments in the middle of the last decade had generally paid very high stamp duty bills.

Property tax bills of €500 and more by 2013...
I believe this is going to be the issue which will topple the government.

Also, I agree with Pearse Doherty in this instance.

Idbatterim

People who paid large amounts of stamp duty during the boom years may be exempt from paying the new property tax, according to reports.

ah and there was me being cynical, expecting to read that those who have never contributed anything to the system would be exempt...

creedp

Dannyboy83 wrote: »

Property tax bills of €500 and more by 2013...
I believe this is going to be the issue which will topple the government.

Also, I agree with Pearse Doherty in this instance.

To be honest I don't think its the €500 a year is the issue per se. Many people in this country are paying as much or more on annual car tax on someting worth a fraction of what your home is worth (even now). The problem as I see it is when it goes much further with the excuse that it covers services etc. I have to laugh whe I hear big Phil going on about the council tax in the UK being over a £1k and all we are being asked for here is a measly €100. At the moment we fund our public services via income tax and if the Govt want to move to more indirect taxation where is the compensation on the income tax side? This is just about the smash and grab what they can off middle income people. When it comes to it the fair property tax will be heavily biased on this cohort of the population with the poor being exempted and the rich protected by having a threshold value so that someone living in a €500k house will pay the same as someone in a €10m mansion. Its always the same.

If this was supposed to be fair it would have to be heavily biased towards the income of the person who owns the house. A house produces no income whatsoever and so how can someone with a low/medium living in a high value house pay the same as a wealthy person living in a 2 bed appartment with a million in the bank/shares/etc. If someone has lost their job and are lucky enough to have no mortgage they could continue to live in the house but may have very limited incometo pay a household charge. Why should someone who bought a house with a big mortgage have to pay the same propery tax as a person with same income and no mortgage? In business tax is on net income not on gross. If 2 similar companies have same gross income but one has much higher costs, then tax is only paid on net income. Why different for a private house? THis think about being fair is rubbish. Household tax is paid out of net income, i.e. incoem already subject to income tax. Its doesn't matter to the taxpayer whether is called income tax or household charge, so get real with the stupid coments about broadening the tax base to limit pressure on income tax. Bottom line it all comes out of gross/net income.

djpbarry

creedp wrote: »

At the moment we fund our public services via income tax...

No, at the moment, a large chunk of public services are being funded by an EU/IMF bailout.

creedp wrote: »

If this was supposed to be fair it would have to be heavily biased towards the income of the person who owns the house.

Interesting how "fair" always seems to mean "make higher earners pay disproportionately more". Why stop at property tax? Should the amount of VAT you pay at the till also be based on your income?

creedp

djpbarry wrote: »

No, at the moment, a large chunk of public services are being funded by an EU/IMF bailout.
Interesting how "fair" always seems to mean "make higher earners pay disproportionately more". Why stop at property tax? Should the amount of VAT you pay at the till also be based on your income?

What's your definition of fair then! Those with the most pay less? As it happens VAT is a flat tax so proportionally those on lower incomes pay more for a given item. It means of course that people on higher incomes can choose to pay more by buying equivalent products of a higher [often perceived] value.

As for the the EU/IMF bailout funding public services .. these are the same services availed of by all residents irrespective of their status. By definition it also funds tax breaks for the rich and provides the infrastructure, limited as it may be in some cases, for all to enjoy! Buts let not worry about that becasue all most people focus on is SW and public pay

djpbarry

creedp wrote: »

What's your definition of fair then!

Lower earners in Ireland paying more than they currently are, but I would use the word "sustainable" rather than "fair".

creedp wrote: »

As it happens VAT is a flat tax so proportionally those on lower incomes pay more for a given item.

So should VAT paid depend on the income of the purchaser?

creedp wrote: »

As for the the EU/IMF bailout funding public services .. these are the same services availed of by all residents irrespective of their status. By definition it also funds tax breaks for the rich...

How?

creedp

djpbarry wrote: »

Lower earners in Ireland paying more than they currently are, but I would use the word "sustainable" rather than "fair".

Fair enough that's another argument but better off people will still pay more.

So should VAT paid depend on the income of the purchaser?

How can it as it is indirect taxation, i.e. unrelated to income. Same as the TV licence, Motor Tax, hospital charges, DPS monthly thresholds, household charge ............

How?

Because tax breaks and infrastructural development/maintenance are funded from tax revenue. Remove tax breaks and we have higher tax revenue which reduces our bailout. Don't fund infrastructural development/maintenance and we have more tax revenue left over to reduce bailout.

djpbarry

creedp wrote: »

How can it as it is indirect taxation, i.e. unrelated to income. Same as the TV licence, Motor Tax, hospital charges, DPS monthly thresholds, household charge ...

But you just said the household charge/property tax should be based on income?

creedp wrote: »

Remove tax breaks and we have higher tax revenue...

How much higher? And what tax breaks are you referring to specifically?

creedp

djpbarry wrote: »

But you just said the household charge/property tax should be based on income?

Yes but the current one isn't

How much higher? And what tax breaks are you referring to specifically?[/QUOTE]

Well one very well publicised one is private pension contributions where wealthy/cash rich people can create a fund for themselves which is subsidised to the tune of 40%. At the very least this benefit/break should be capped.

meglome

djpbarry wrote: »

Lower earners in Ireland paying more than they currently are, but I would use the word "sustainable" rather than "fair".

I've been trying to get this across to the many people whining about the household charge. Firstly I'm not seeing people prove we are actually heavily taxed to begin with and making taxes sustainable is a very sensible thing to do.

djpbarry

creedp wrote: »

Yes but the current one isn't

I know that. But you’re saying it should be. So I’m asking you if the property tax should be based on income, then why shouldn’t VAT? Or any other tax for that matter?

creedp wrote: »

Well one very well publicised one is private pension contributions where wealthy/cash rich people can create a fund for themselves which is subsidised to the tune of 40%. At the very least this benefit/break should be capped.

I’m not familiar with the details, but fine, let’s scrap that – how much will that save? What else should be done away with?

creedp

djpbarry wrote: »

I know that. But you’re saying it should be. So I’m asking you if the property tax should be based on income, then why shouldn’t VAT? Or any other tax for that matter?

Your obviously taking the p1ss!

djpbarry

creedp wrote: »

Your obviously taking the p1ss!

I'm obviously being facetious, yes. But my question is genuine - why should any tax, other than income tax, be based on income?

creedp

djpbarry wrote: »

I'm obviously being facetious, yes. But my question is genuine - why should any tax, other than income tax, be based on income?

I suppose the ability to pay principle is a useful measure when considering the burden of taxation. If you are going to levy flat taxes then obviously they need to be set at a level in which the less well off can actually afford to pay. Non-income based taxes would therefore not generate a whole lot of revenue and would negate the possibility of any form of significant broadening of the tax base. In relation to an income-based property tax an alternative of course is a wealth tax which looks at all assets values not just private residences. for example, why should a farmer/business person pay no property tax on his farm/premises and financial assets but pay a property tax on his residence? A residence is one asset that does not generate an income and so unless some other measure is used to determine an ability to pay a residence tax then it would have to be set at the lowest common demoninator or perhaps have a series of exemptions - usual case scenario medical card holders, pensioners, social welfare recipients, etc.

Rorymac2

Is it true that the Roman Catholic Church is excempt from the property tax?can anybody tell me?

bbsrs

Rorymac2 wrote: »

Is it true that the Roman Catholic Church is excempt from the property tax?can anybody tell me?

Yes due to their charitable status.
http://www.independent.ie/national-news/archbishop-has-paid-household-tax-despite-exemption-3088593.html