Home Economics - Answering your property questions
Q. I bought a house with my fiancee earlier this year. I was a first-time buyer but she was not and we assumed we would have to pay the Local Property Tax (LPT) as we didn't qualify for the exemption, and we did so in April. But now I hear that this may not be the case. I'm confused.
Welcome to the club. Having attempted to boost the sluggish property market in 2013 and to acknowledge the phasing out of Mortgage Interest Relief, the Government decided that anyone buying a house for the first time, as a main residence, whether new or second-hand, would be exempted from LPT for three years. However, Section 8 of the Finance (Local Property Tax) Act 2012 (Exemption for first-time buyers), which is the basis for this relief, was drafted in such a way as to appear ambiguous and it was argued that it applied, when read literally, to all house buyers during this year.
Revenue says: "The result is that a person who purchases a second-hand house and occupies it as a sole or main residence is entitled to the exemption regardless of the fact that they are not a first-time buyer. Revenue has attempted to identify the individuals who may be impacted by this: those who bought before May 1, 2013, and paid the 2013 LPT and who will not have a liability for 2014 to 2016, and those who bought after May 1 and who will not have a liability for 2014 to 2016."
So, it looks like you've got your exemption. You don't need to do anything as Revenue will be writing to you shortly. In the meantime, don't pay the 2014 tax.
Q. Do you know if there are any rent-to-buy schemes still available in the Dublin area?
Rent to buys developed during the boom as a way of developers off-loading rented properties to people who couldn't initially afford to mortgage them. They would pay a deposit and an over-market rent which they would get deducted from the price if they eventually purchased the property within an agreed time. It allowed them "try out" a property before committing to buying it. With mortgages abounding, this was quite successful, however these days it's different.
I couldn't find any schemes currently available in Dublin and Nama confirmed to me that it doesn't have any either. However, it did draw my attention to the 80:20 deferred payment initiative which it operates on its properties in conjunction with certain banks.
Essentially, it offers 20pc protection from house price declines in the first five years of a mortgage.
You pay 80pc of the property value up front and the bank gives Nama the remaining 20pc in five years depending on the property's value. See www.nama.ie for available units.