Will property taxes prove palatable, asks ISABEL MORTON

THE GOVERNMENT is making every effort to find ways to raise more cash to keep us afloat. Lots of things are being “thrown on the table” these days. But the various dishes are passed in front of us all first, for a quick glimpse, just to monitor our initial reaction.

Some are barely palatable, others definitely not. Most just look boring and tasteless, but acceptable, given that we are now all rather hungry.

The Government recently introduced a levy (tax) of €200 on second and subsequent homes. As this tax does not affect primary residences, there were a few complaints but no real tantrums. Of the estimated 460,000 second properties there are around 200,000 investment properties, some 60,000 holiday homes and a further 200,000 “vacant properties” which would also be subject to the same €200 levy, providing a total of approximately €90 million for the Government’s coffers.

I suspect many of these “vacant” properties could be situated in half-built developments, which may never actually be completed. If this is the case, it will no doubt be up to the individual property developers and private owners to prove that they are not, and never have been, habitable and therefore not subject to the €200 levy per unit.

Those who own second or subsequent rental properties are now aware that they (as landlords) are already subject to a number of taxes and expenses, including the recently introduced second home levy of €200, the PRTB (Private Residential Tenancies Board) registration fee of €70 per tenancy, estate agents’ fees (of approximately one month’s rent), management fees (which can range from a few hundred to a few thousand euro per annum), advertising, services, repairs and redecoration – and now, the BER certificate.

Some have been forced into the role of landlord due to the fact that they are unable to sell their properties.

In addition to the costs already outlined, these reluctant landlords are also coping with the fact that the value of their property has dropped considerably and that they must now be prepared to negotiate with potential tenants who are making every effort to bargain down the rent.

Rumours abound that the Government is now planning to reintroduce residential property tax, which would target all homeowners.

Obviously stamp duty, which had been earning the state millions during the boom times, is now dwindling.

A property tax would at least be a constant sum and not subject to the fluctuations of the property sales market.

Most agree that there is no easy and fair method of imposing a viable property tax on domestic residences based on the values of the properties.

And this has become all the more difficult of late, as accurate property sale prices are no longer available to the public.

The last attempt at introducing a property tax failed after a few years and was abolished with effect from April 5th, 1997.

It was seen as an unfair and unpopular tax and often referred to as “The Dublin Tax” as the capital’s residents paid the highest levies, as it was chargeable on the market value of residential property.

Estate agents suggest that the tax should be based on the self-assessed commercial rental value (regardless of whether the property is rented, empty or the primary residence).

Naturally, estate agents would prefer to see the reintroduction of property taxes rather than the continuation of stamp duty charges, as the latter has a serious effect on mobility and therefore directly affects their business.

However, they all agree that property tax should replace, not supplement, the stamp duty.

They also point out that, due to the lack of movement in the property sales market, the Government is currently receiving very little stamp duty, so it may as well abolish it now and introduce a nominal property tax across the board.

Many, who have purchased property over the last few years, are particularly concerned now that the reintroduction of residential property tax will in effect result in them having to pay tax on the double, as they have only recently paid stamp duty on their home.

The general consensus is that these people would be granted a reprieve for a number of years to ensure that they were not being unfairly penalised.

From past experience, we know that the introduction of residential property tax would be difficult to implement fairly and equitably and could be the cause of financial hardship to many who are already finding things difficult.

We had been sitting at a banquet table overflowing with delicious foods and now we find ourselves scrabbling for a bowl of porridge and grateful that we are eating at all.