Minister insists property tax hikes will be 'affordable'
- Minister indicates there is likely to be some hike to the LPT - but insisted it would be 'affordable'
- A fresh evaluation of homes, taking account of the massive price rises, is due to take effect from November 2019
- Potential for increased bills will be a concern for many households already struggling with substantial mortgage repayments
ROCKETING house prices will be factored into a review of the Local Property Tax (LPT) in order avoid a dramatic increase in bills, Finance Minister Paschal Donohoe has said.
The minister indicated there is likely to be some hike to the LPT from 2020, but insisted it would be “affordable”.
The potential for increased bills will be a concern for many households already struggling with substantial mortgage repayments.
Experts are predicting that property prices will be above the Celtic Tiger peak by the end of next year, just as new LPT rates are set to kick in.
“When this issue developed earlier on in the year, particularly when the bills for the LPT began to come into people’s homes in January, I said that my view regarding the changes in property taxes is that changes in the future should be moderate and affordable,” Mr Donohoe said, adding: “That continues to be my view.”
Households are currently paying bills based on the market value their property could reasonably be expected to attract in May 2013.
The amount paid rises gradually depending on the valuation.
For example, a home worth €275,000 is charged €495 in tax, while a home valued at €375,000 must pay €675 annually.
A fresh evaluation of homes, taking account of the massive price rises, is due to take effect from November 2019.
Latest figures from the Central Statistics Office (CSO) show property prices jumped 13pc in the year to February alone. The rise is faster than in previous months.
Mr Donohoe’s department is currently carrying out a review of how the LPT operates.
“It’s worth bearing in mind that next year is the revaluations. People’s bills next year will reflect the current valuation,” he said.
“We’re talking about changes that will take place from 2020 onwards.
“But they will be moderate, they’ll be affordable and they’ll be well understood by people in advance of that.”
Asked if he was ruling out some level of increase, he replied:
“It’s too early for me to say that. The work in relation to it is under way at the moment.”
Mr Donohoe cited a recent publication by the Budget Oversight Committee which he described as “helpful”.
“I’ll be considering that. Any changes that take place I aim for them to be very moderate,” he said.
The report warned that proceeding with revaluations of LPT as provided for in current legislation “would have harmful effects and should not be considered”.
It recommended adjusting rates nationally to maintain the existing LPT yield or allowing this to be done at local-authority level.
The committee also argued that almost 50,000 property owners currently exempt from LPT should be brought into the net.
The majority of these exemptions relate to new and unused properties built since 2013, “and therefore, these property owners are being subsidised by other taxpayers”.