Local property tax to apply to at least 100,000 more homeowners
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At least 100,000 more homeowners face paying the local property tax from next year after the Government decided to end exemptions on homes built since 2013.
In addition, 36% of homeowners will see their tax liability go up, and every home in the country liable for the tax will be revalued.
Finance minister Paschal Donohoe confirmed that a re-evaluation process of all homes will take place in November. He said most people who do face an increased bill will be charged around €90 a year more.
The announcement caught some of Mr Donohoe's Cabinet colleagues by surprise, with a number of ministers angered that it had taken attention away from the National Economic Recovery and Resilience Plan, which was also announced today.
They said that little had been flagged about the decision, which has been heavily criticised by the Opposition.
However, plans to end exemptions and to begin revaluations has been deferred a number of times, leading some in the Government to believe that there was little scope to further delay the changes, with the potential for legal action by a homeowner currently liable for the tax.
Cabinet was told that from November, the rate of LPT on a house will be equal to 0.1029% of the new value of the house.
The reduced rate, compared to the 2013 formula, will mean that a majority (53%) of homes will either pay the same rate of tax, or see a reduction (11%), while a third of homeowners will see their property tax bill rise by up to €100. A further 3% will climb by over €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
- 3% of homes will see a larger increase of up to €200 by moving up two bands
- It is estimated the change will raise €560m annually
- The charge for the most expensive homes will climb from €1,755 to over €2,830
The changes will see valuation bands increased by 75% to account for a rise in house prices since 2013. For example, a homeowner paying €405 on a home valued in 2013 at €200,000-€250,000 will pay the same if their home is valued between €350,000-€437,500 on November 1. If it is valued higher, they will enter the next band at €495 per annum.
The overhaul of the tax will also see councils keeping all of the money raised from property taxes, instead of the 80% they can retain currently. Mr Donohoe said an equalisation fund will exist for around two years to plug funding deficits for local authorities at what, sources estimate, will be a cost of €30m a year.
He said the emphasis for the tax will be on local services, and that "if you paid a tax within a local authority area, that money is spent in the local authority area".
Taoiseach Micheál Martin said the new property tax system will be "fair and affordable".
"The majority of people will not be paying more," he told RTÉ News.
Asked about the timing of the announcement, Mr Martin said if the Government waited, "inflationary pressures" would make it far more difficult.
"We have to keep going here."
Sinn Féin president Mary Lou McDonald said the tax is inherently unfair.
"We have never accepted that a tax on the family home is fair and it's certainly not affordable for very, very many people for whom their home, their two-up two-down or their semi-d, is the one asset that they have worked their whole lives to pay for," she said.