One third of homeowners will see property tax bill rise by up to €100
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All homes are to be revalued under plans to bring tens of thousands of homes built in recent years into the property tax net, with one-third of homeowners seeing their existing property tax bill rise by €100.
In addition, Local Property Tax (LPT) exemptions for owners of new-build homes will end this year, bringing tens of thousands of homes built in recent years into the property tax net.
Finance Minister Paschal Donohoe has confirmed that a re-evaluation process of all homes will take place in November.
"I believe it is important that all homes pay local property tax the same, it is tax for local services and what the Govenment agreed today is a plan to bring those homes into paying local property tax but to do it in a way that is affordable for the country," Mr Donohoe told programme.
The Irish Examiner understands that Cabinet was told that from November, the rate of LPT on a house will be equal to 0.129% of the new value of the house.
The reduced rate compared to the 2013 formula will mean that a majority of homes will either pay the same rate of tax or see a reduction, while a third of homeowners will see their property tax bill rise by up to €100.
According to the Cabinet memo presented to ministers, Mr Donohoe and his officials estimate that:
- 11% of homes will see a decrease in LPT;
- 53% of homes will see no change in the LPT applied;
- 33% of homes will see an increase of up to €100 by moving up one band while:
- 3% of homes will see a larger increase of up to €200 by moving up two bands.
- It is estimated the change will raise €560 million annually.
Under the plans, which will take effect from 2023, another major change to the LPT will occur. At present, wealthier local authorities must hand over €2 out of every €10 raised in LPT to an equalisation fund to help support poorer counties, but from 2023, 100% will be retained in the local authority with central government making up any shortfall.
The Finance Minister today brought a memo to Cabinet outlining the change to the tax system, which will see tens of thousands of people who bought newly built homes since 2013 brought into the net for the LPT.
Mr Donohoe had last September announced a further deferment of the changes.
Taoiseach Micheàl Martin has insisted the recalibration to the Local Property Tax (LPT) agreed by Cabinet will be "fair and affordable."
He said the Finance Minister did bring a memo to Cabinet today and he will be making detailed announcements in relation to that tomorrow.
"It's fulfilling a Programme for government commitment that any recalibration of the property tax scheme will be fair, and will be affordable," he said.
Mr Donohoe said last year that the deferment was designed to ward off "volatility" in the market due to the pandemic.
Sources said that this legislation will set out to achieve the goals for the tax set out in the Programme for Government.
Under that document, there are three aims for the tax. Firstly to bring forward legislation "on the basis of fairness" and that "most homeowners will face no increase".
Secondly to bring new homes, which are currently exempt from the LPT, into the taxation system, and, thirdly, that all money collected locally be retained within the county, using an Exchequer-backed equalisation fund.
The Minister updated Cabinet this morning about proposed legislation to address the future of the tax in line with these commitments. The Heads of Bill will be published tomorrow.