The Minister for Environment, Community and Local Government, Mr. Phil Hogan, T.D. has established an Inter-Departmental Group on a new Property Tax to replace the Household Charge by 2014 at the latest.   See more Details of Property Tax Group

Written submissions to the Property Tax Group are invited from interested organisations and members of the public and should be sent before 16 March, 2012 to:

Property Tax,
Local Government Finance,
Department of the Environment, Community and Local Government,
Custom House,
Dublin 1.

Email: propertytax@environ.ie

STRUCTURE OF SUBMISSIONS

Topic headings

Written submissions should be concise and structured, and should follow the sequence of the terms of reference below. Submissions covering more than one area in the terms of reference will be welcome. It is not necessary for a submission to cover every topic.

Terms of reference area to which the submission relates

The terms of reference area to which the submission relates should be indicated. The terms of reference are:

To consider the design of a property tax to be approved by Government to replace the household charge and that is equitable and is informed by previous work and international experience.

The property tax is to:

· meet the immediate financial requirements of the EU/IMF programme;

· provide a stable funding base for the local authority sector in the medium and longer terms; incorporating an appropriate element of local authority responsibility subject to any national parameters;

· be collected centrally by the most cost efficient and effective means;

· facilitate easy and/or phased payments by households;

· be easily determined (e.g. on a self assessment basis), and having regard to available information on residential property and/or house ownership details;

· ensure the maximum degree of fairness between and across both urban and rural areas.

The Group is also to consider the appropriate arrangements for:

· a robust audit function; and

· strong enforcement and penalty provisions for non-compliance.

If the submission covers part of an area, this should be specified. If applicable, the submission should indicate the writer’s professional or other interest in the topic.

Proposals

8. In the case of each proposal, a submission should include the following:

· A brief summary of the proposal.

· Supporting documentation. Documentation in support of the proposal should, if possible, include:

a. information on costs and benefits (or “pros and cons”), and

b. statistical or other research data underlying the proposal.

Non-structured section of the submission

9. Any further information, comments, views or suggestions which the individual or organisation concerned believes would be of assistance to the Group may also be included.

 

The current government – whoever is in charge – always takes the stick for implementing anything people don’t agree with.
The Household Charge – and the impending Property Tax are fairly unpopular – but whilst the current government introduced them – whose idea was it?

The suggestion of a property based tax being re-introduced in Ireland was mentioned as far back  in December 2010 in the Four Year Plan published by the Fianna Fail government.  See more about that here.

The IMF/EU seem to get the blame most of the time  though  – all the  government leaflets and speeches keep saying that the  Household Charge has been introduced on foot of the   “EU/IMF Agreement”.

The IMF are known to promote the use of property taxes – in a 2012  report titled – Revenue and Expenditure Policies – Advanced and Emerging Economies

they said that  “Property taxes are a promising source of increased revenue for some countries, but there are practical obstacles. They currently yield around 3 percent of GDP in Canada, the United Kingdom, and the United States, but well below 1 percent in other G-20 countries. Efficiency and fairness argue strongly for firm use of property taxes: they are relatively benign for growth; raise few issues of international coordination; and, while their incidence is still not fully understood  they seem to be borne mainly by the well-off. Obstacles to their wider use include administrative complexities and costs (including the development of efficient cadastre and valuation mechanisms), and the unpopularity that their transparency can bring “

The  Household Charge -  came into force in Ireland on January 1st 2012.   Most owners  of residential property in Ireland are liable for the household charge on each residential  property they owned  as at 1st January 2012. Home owners who live outside Ireland are also expected to register for and and pay the charge. The 2012 Household Charge amount is €100

The Household Tax is due to be paid before March 31st in each year of liability – otherwise penalty charges will be applied.

No bills or invoices  for the household charge will be sent out – the charge will be on a self declaration basis.

The definition of a residential property includes  – houses, maisonettes, flats, apartments and , bedsits.  So – the owner of a building split into 5 bedsits will be liable for five lots of Household Charge.

A  residential building is liable if it is occupied, or suitable for occupation.

Mobile homes are not classed as residential property and are not liable.
Tenants do not have to register for the Household Charge.

A property  which is let to more than one tenant with  exclusive use of a bedroom for each person and joint use of common areas will only be liable for one Household Charge

Registration and payment of the Household Charge  can be carried out online on the HouseholdCharge.ie  website.   Payment by Mastercard, Visa or  Laser accepted .
The new charges can be paid as a  one off payment  or by 4  direct debit installments (March , May, July and Sept). Direct Debits must be done before March 1st.

Home Owners  can also print off a registration form on the Householdcharge website and send it by post with payment by cheque to  Household Charge, PO Box 12168, Dublin 1
Registration forms should also be available  from City / County Councils; Libraries; Citizens Advice Centres or by calling LoCall  1890 357 357

You can pay the Household Charge by  cash at your local Council Office but only before March 31st. There is no additional fee fee for over the counter payments.

The liability date for 2012 is January 1st -  and households will have three months to pay before  Late payment penalties  apply as follows :

Payments made within 3 and 6 months of January 2012 – a 10% penalty.
Payments made between 6 and 12 months late – a 20% penalty.
Payments more than 12 months late – a 30% penalty plus 1% interest per month

So – if  someone is 12 months late paying the €100 household charge – they will owe €130 plus another €12 interest  – a total of €142.

If  charges remain unpaid a charge will remain attached to the property.

The new Household Charge will apply to properties on which NPPR is also being paid. More about NPPR here

The following  exemptions from the Household Charge apply:

The following buildings  are not defined as  residential property and will not be liable for the charge :  Buildings that are …

• Part of the trading stock of a business and from which no income has been derived since the building’s construction, and  has never been used as a dwelling.

• vested in certain public authorities (including property where households are purchasing their homes under the Shared Ownership Scheme and where the local authority still retains an ownership stake)

• owned by voluntary housing bodies;

• wholly used as dwellings and liable for commercial rates

An owner of a residential property is exempt from the household charge if , on the liability date, the residential property is:

• Comprised in a discretionary trust;

• Owned by an approved charity;

• Vacated by the owner by reason of long term mental or physical infirmity. (long term is more than 12 months)

Waivers

The following households will have the charge waived :

1. Those in receipt of mortgage interest supplement -  (about 18,000 households)

2. Those in certain  unfinished housing estates (Estimated to be less than 1300 estates) :   – which will be on a list prescribed by the Minister for the Environment, Community and Local Government. (See List of  Unfinished Estates Here).

People claiming a waiver still need to register for the household charge and claim the waiver.

More about Household Charge Exemptions Here

Co-owners of propertyare jointly and severally liable for the household charge, and  payment of the charge by any one co-owner shall discharge the liability for all the co-owners. Only one of the owners needs to register.

Selling Your House : A vendor of a residential property must  pay  any household charge, late payment fee and late payment interest due on the property and give a certificate of discharge, exemption or waiver in respect of each liability date during the vendor’s ownership to a purchaser on or before the sale or transfer can be completed.

The Household Charge is just an interim measure to be put in place until a full property tax system is worked out.

The Household Charge money is supposed to be used by local authorities to help fund local services such as fire and emergency services, libraries, street cleaning, lighting, planting etc. Up until now the Exchequer has contributed to the funding of these services – but now some of the funding will be collected  through the introduction of this household charge instead.

Take a look at our Top Tips For Saving Money in 2012 – If you  follow some of these you could easily save enough to cover your Household Charge and more.

How many properties will be liable for the new Household Tax – (which should  really be called a Property Tax)

According to preliminary Census 2011 figures – there were  2,004,175  dwellings in Ireland in May 2011
(Of those – 294,202 were vacant and 1709973 dwellings were  occupied.)
Vacant houses are not exempt – but it is possible that some of these vacant dwellings may be exempt because they form part of the trading stock of a business and they have never being lived in. Many NAMA owned properties may fall into this exemption – but the total figure involved is not known. Let’s estimate that  100,000 of these  vacant properties are exempt. (It is an over estimation and could overlap with some of the unfinished estates)

All Local Authority owned housing is exempt – and that is about  108,000 homes.
Also exempt are houses owned by approved non-profit housing bodies (housing associations and housing co-operatives) which is about  25,000 dwellings.
So – that’s 133,000 exempt rented dwellings

There are also  about 18,000 homeowners on Mortgage Interest Supplement – who will also be exempt.

That brings the total estimated exempt properties to  251,000

Houses on certain “unfinished estates”  are also  exempt. The list of unfinished estates is here and  there are 1325  estates involved.  Any habitable or inhabited houses on those estates will be exempt for a maximum of 2 years. The government  estimate the number of completed houses on unfinished estates in 2012 to be in the region of  34,000.

So – there could be as many as  285,000 houses and apartments that are exempt from the Household Charge. That leaves about 1.73 million properties that could be liable.

The Minister for the Environment, Community and Local Government,  Phil Hogan  today announced that he has established an Expert Group to consider the  introduction of a  valuation-based property tax that will replace the current €100 Household Charge.
The Group is due to report back  by the end of April 2012.

The Property Tax expert group will be  chaired by Dr. Don Thornhill  and will be made up of  of senior officials from the Departments of Environment, Community and Local Government; Finance; Public Expenditure and Reform; Communications, Energy and Natural Resources, Social Protection and the Revenue Commissioners. The Group may also call on technical expertise from the Central Statistics Office, An Post/Ordnance Survey Ireland, Property Registration Authority, the Valuation Office, the Property Services Regulatory Authority.

The terms of reference for the group are :

“To consider the design of a property tax to be approved by Government to replace the Household Charge and that is equitable and is informed by previous work and international experience.”

The minister said that any new residential property tax will have to :

· Meet the immediate financial requirements of the EU/IMF programme;

· Provide a stable funding base for the local authority sector in the medium and longer terms incorporating an appropriate element of local authority responsibility subject to any national parameters;

· Ensure the maximum degree of fairness between and across both urban and rural areas

· Be collected centrally by the most cost efficient and effective means;

· Facilitate easy and/or phased payments by households;

· Be easily determined (e.g. on a self assessment basis), and having regard to the information currently available (or to be made available through registrations for the household charge) on residential property and/or house ownership details.

Earlier this month we wrote about How Much The Property Tax Could Be  – with figures of up to €675 a year for houses valued between €150k and €300k

The Chairman – Dr Don Thornhill seems to be involved in several other areas. His board memberships include the National Competitiveness Council (Chair), the Irish Payments Services Organisation (Chair), the Ageing Well Network (Chair), Hibernia College (Chair), the Irish Taxation Institute, the Chartered Accountants Regulatory Board (Deputy Chair), Forfás and the Irish Hospice Foundation.

Previously he was Executive Chairman of the Higher Education Authority, Secretary General of the Department of Education and Science and Assistant Secretary in the Office of the Revenue Commissioners. Don has a B.Sc. and Ph.D. in Chemistry from University College Dublin and a M.Sc. (Econ.) from Trinity College Dublin.

Houses  in certain unfinished housing estates are to be granted a waiver  from the new Household Charge  in 2012   Read more about some other Household Charge Exemptions and Waivers

Which Unfinished Estates will be granted a waiver ?

Homes on two categories of estates will qualify for a Household Charge waiver in 2012 – these are :-
Category 3 unfinished estates -  where  a receiver has not been appointed and the developer is still in place but is effectively inactive;

Category 4 unfinished estates -  where  the development has been effectively abandoned and is posing serious problems for residents.

There are about 1325  unfinished estates in category 3 and 4 that are to be granted a waiver  from the Household Charge . We estimate that there could be as many as 34,000 completed houses and apartments on these unfinished estates. Owners of these houses will not have to pay the household charge ( in 2012 at least).

Note : – owners  of homes on these estates are supposed to  register for the  Household charge and claim the waiver for 2012.

The full lists of unfinished estates in the various counties  to be granted a waiver can be found below ,….. these are all the category 3 and 4 unfinished estates.

Carlow County Council

 Unfinished Estates in County Cavan

 Clare County Council

 Unfinished Estates Cork City Council

Cork County Council

Unfinished Estates Donegal County Council

Dublin City Council

D-Rathdown County Council

Fingal County Council Unfinished Estates

Galway City Council

Galway County Unfinished Estates

Kerry Unfinished Estates List

Kildare County Council

Kilkenny County Council

Laois County Council

Leitrim Council

Limerick City Council

Limerick County Council

Longford County Council

Louth County Council

Unfinished Estates County Mayo

Meath County Council

Monaghan County Council

North Tipperary County Council

Offaly County Council

Roscommon Unfinished Estates

Sligo Unfinished Estates

South Tipperary County Council

Waterford City Council

Waterford County Council

Westmeath County Council

Wexford County Council

Wicklow County Council

We have been in touch with South Dublin Council - and they have confirmed that there are no category 3 or 4 unfinished estates in South County Dublin Council area.

Residents nationwide  in the following types of unfinished estates will have to pay the Household Charge:

Category 1:  where the development is still being actively completed by the developer
Category 2: where a receiver has been appointed;

The householdcharge website  states that  if  anyone has a query in relation to the estates which qualify for the waiver, they need to contact the Planning and Housing Policy Section of the Department of Environment, Community and Local Government on  one of the following phone numbers:

(053) 911 7398  ; (053) 911 7402 ; (053) 911 7397  ; (053) 911 7399

The temporary Household Charge of €100 per property began in Ireland from  January 2012 – but this is only in place until a full Irish Property Tax system is put in place .
The property tax should be in place by  2014 – but it is possible it could start as early as 2013.

The idea of a Property Tax  was mentioned in the IMF/ECB agreed Four Year Plan -  back in November 2010 – where Fianna Fail committed to a ” site value tax” to be introduced in 2012 – with a minimum charge of €100 per property.

The Government is  now establishing  an “expert group ” to recommend an appropriate system of property tax. This  expert group  is due to report back to Minister for the Environment and Local Government  by  April 2012.

The Commission on Taxation did a report on  Property Tax back in 2009 – and it is likely that their suggestions coulld  form the basis of any Property Tax system.
The Commission’s  report included the following suggestions on Property Tax.

A tiered Property Tax – based on the value of the house.
Valuation  would  be self assessed by the property owner.
Stamp Duty abolished for residential property purchases
Exemptions for 7 years from the date stamp duty was paid on the house.
Tax charged on vacant and occupied properties.
The NPPR would no longer be charged .
Waivers for people on lower incomes

The amounts of Property Tax suggested in the report  were as follows

Valued Under €150,000  – Tax Amount in the range  €188 to €225  a year
Valued between €150k to €300k  – Property Tax between€563 and €675 a year
Valued between €300k and €450k – Property Tax between €938 and €1125 a year
Valued between €450k and €600k – Property Tax between €1313 and €1575 a year
Valued between €600k and €750k – Property Tax between €1688 and €2025 a year
Valued between €750k and €1m – Property Tax between €2188 and €2625 a year
Valued between €1m and €1.5m – Property Tax between €3125 and €3750 a year
Valued Over €1.5m – tax based on between 0.25% and 0.3% of the value.

It was estimated that about €1 billion a year could be raised by a property tax in Ireland with the rates shown above.

There was also a report about Property Tax by the ESRI in 2010 – which recommended slightly higher levels of tax (o.4%)

The Council Tax system in the UK took years to implement and cost millions of pounds. They have a complicated system of income related rebates and other discounts and exemptions which requires thousands of staff and expensive computer systems to administer.
It will be interesting to see how quickly a similar system will be put in place here -  given that we don’t even have a property database for the country and are relying on people to register for the Household Charge to build the database!

The tax on Non Principal Private Residences ( NPPR ) in Ireland  came into effect in Ireland on 31st July 2009.
The 2012 NPPR charge is €200 – it has been the the same amount since 2009

The 2012 NPPR charge is based upon the ownership and status of the property on the 31st March 2012.  So -  if you own a property in Ireland on 31st March 2012 and it is not your main residence you will be liable for the NPPR charge.( Non principal private residences).
You will also be liable for the new Household Charge from January 1st 2012.
Property owners need to pay the NPPR charge for 2012 on or before the 30th June 2012  to avoid late payment fees.

Although it is sometimes  referred to as a “second home ” tax – it does not matter if you only own the one property . If  you are not  using the house as your main residence – then you are liable for the NPPR .

The 2012 NPPR charge must be paid within two months of the liability date- i.e before 31st May 2012.
A late payment fee of €20 a month is payable after a further month has expired i.e three months after the liability date and one month after the last date for payment. There is a one month grace period – so all charges paid after 30th June 2012 will attract a late payment fee of €20 a month.

The  “NPPR” charge is aimed at  property that anyone owns in Ireland that is not used by them as their principal residence. You do not have to own two homes to be liable for this charge. You could be living in a rented house or living abroad while the home you own is empty or you have tenants in it.
The  NPPR charge is the same for all properties – regardless of size, location or value.

The legislation for NPPR  (Local Government (Charges) Act 2009 ) is structured with a starting position of a universal liability for all residential dwellings in respect of the charge. It then goes on to exempt certain buildings and owners from this liability.

The main exemption is for principal private residences. No person can have more than one sole or main residence. If you are renting a home and own another property – you are still liable for the NPPR. You don’t have to own more than one house to be liable.

Note : A property that is not suitable for use as a dwelling should not be regarded as dwelling within the meaning of the act . ( A temporary cutting off of the electricity or water supply does not make a property unsuitable)

Other Exemptions: according to nppr.ie

a) Where a person partly occupies a dwelling as his or her sole or main residence, and avails of and is entitled to the Revenue Commissioner’s Rent-a- Room Scheme, no liability for the NPPR charge will apply.

b) Charities are exempt
c)Properies that are liable for commercial rates will not be laible for the NPPR.
d)There is also an exemption for Newly Constructed but Unsold Buildings – that are vacant and  have never been occupied.

Property Owners can register your properties and pay the charges online at the nppr.ie  website by credit or debit card.
Property owners  will also be able to register and pay at your local council offices using an  NPPR registration form. The payment types accepted wil be credit card, debit card, bank draft, postal order and cheque. Over the counter payments will incur a €10 fee from Jan 2012

Late Payment Fees : if the NPPR  charge is not paid within a month after the last date for payment, a late payment fee of €20 will apply for every month or part of month that the €200 Euro charge remains unpaid.

Landlords Note: Information from Revenue Dept  is that the €200 charge is not an allowable expense for calculating rental income.

Property Registration:
It seems that the onus is on property owners to register any properties that are not their principal residence.  There is no national housing / address database in Ireland – so it is probably going to be difficult for the local authorities to determine which properties are actually non principal private residences.
The Local Government Charges Bill 2009 allows for the use of information from the Private Residential Tenancies Board , the Revenue department  and ESB to assist in the identification of non principal residences. There are probably many landlords who are not even registered with the PRTB – so there may be many rented properties that will be missed unless the owner voluntarily registers them.

Properties in the Rental Accommodation Scheme were  exempt – but that exemption has been withdrawn from Jan 2012

There are also limited exemptions where a person is moving house and, in temporarily  owns two houses for a  short period.

Full details on www.NPPR.ie where you can register and make payments.

(Update -  A  Household Charge – a new property tax was introduced in January 2012   All owners of residential property are liable fo this  -  even those who already pay NPPR )