Saturday 23 September 2017

Tax on family homes 'would bring protesters on to the streets'

  • Move to hit families with monster tax bills when they sell their home
  • Family home is currently exempt from capital gains tax
  • 'Taxing the sale of family homes will be very difficult'
(Stock picture)
(Stock picture)
Charlie Weston

Charlie Weston

Older people and farmers will take to the streets to protest at any move to hit families with monster tax bills when they sell their home.

The plan to impose the 33pc capital gains tax to family homes is one of a number of options outlined by officials to Finance Minister Paschal Donohoe.

The family home is currently exempt from capital gains tax.

There has been a furious reaction to civil servants proposing that this exemption be scrapped in the Budget.

Charging the tax on the sale of family homes would impact on those moving house because they need a larger property for a growing family.

It would also mean older "empty nesters" who decide to downsize would be hit with a massive tax bill.

Chairman of the mortgage committee of the Irish Brokers Association, Michael Dowling, said people were enraged at the suggestion the sale of the family home could be taxed.

"Taxing the sale of family homes will be very difficult. It will affect older people in particular," he said.

Fianna Fail TD Michael McGrath Picture: Collins
Fianna Fail TD Michael McGrath Picture: Collins

"People will take to the streets, as was the case for water charges and the move to take medical cards off the elderly."

Justin Moran, head of advocacy and communications at Age Action, said: "On the one hand we have the Department of Housing exploring ways of encouraging older people who own their homes to downsize and now we have the Department of Finance targeting those older people with a massive tax on the family home.

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"You can't have it both ways. For many older people their home is their only asset. They're struggling to get by on a small fixed income, scrimping to pay exorbitant property taxes and will be furious at the suggestion that if they were to sell their home they will now have another new tax to pay."

President of Irish Creamery Milk Suppliers Association, John Comer, said his organisation rejected the idea.

"In common with every other group and sector, farmers will not accept a situation where a family's home would even be considered for capital gains tax purposes; it's a non-starter and it blurs the line between an asset and a home in a hopeless and cynical way," he said.

If the proposal was to be implemented it would mean a family moving to a larger home, or elderly people downsizing, would be hit with huge capital gains taxes. A family that originally bought a home for €300,000 years ago would typically now have a property valued at €500,000.

This would mean a gain of €200,000. If that family decided to sell up to move to another home they would be forced to pay capital gains tax of €66,000 on the gain in value on their home. This would mean less money was available to fund a new home.

For "empty nesters" moving from a large home to a smaller one, the imposition of the tax would mean their savings for their old age would be reduced.

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The finance officials suggest if the change is made it could be designed so the tax on the sale of the family home would not apply if the entire proceeds are used to buy a new home, as is done in Portugal.

But even this could expose people who are downsizing to a tax bill as they would be unlikely to use all of the proceeds for a smaller home.

Others options are allowing relief for homes up to a certain market value, or allowing relief on gains up to a certain cash limit. The tax would be imposed on any sum above that amount.

Fianna Fáil's finance spokesman Michael McGrath said his party would not be supporting any move to tax family homes when they are sold.

Liz Hughes, of accountancy body ACCA, said taxing principal private residences would discourage labour mobility and downsizing in particular.

Irish Independent

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