A new property tax of €100 per home is to be introduced in 2012, in the first phase of a proposed site tax that’s expected to net the Government €530 million over the next four years.
According to the four-year plan, an interim site value tax will be introduced in 2012, and finalised in 2013 when a full value-based tax will be introduced. The interim measure will involve a fixed local service charge contribution of around €100 per annum. That charge will rise to an average of just over €200 per dwelling in 2013.
The tax will apply to 1.8 million households as well as to zoned lands comprising an additional 700,000 housing sites. The tax is expected to raise €180 million in the first year, and an additional €350 million in 2013 and 2014 combined. It’s not clear if the charge will replace the €200 levy that already applies to second homes. The second homes levy raised around €65 million in 2009 with a final figure not yet available for 2010.
Stamp duty remains unchanged in the plan, with purchasers other than first time buyers, still paying up to 9 per cent on transactions of property worth over €125,000. Stamp duty on residential property transactions has brought in around €80 million so far this year, down from a peak of €1.3 billion in 2006, at the height of the property boom.
The plan gives the Government a further three years to establish a property valuation mechanism that could be used for taxation purposes. Earlier this year it announced plans to set up a property database that could be used to monitor market trends and house values.
The Society of Chartered Surveyors welcomed the introduction of the property tax but said the Government's approach lacked transparency.
Society president Peter Stapleton said that such a tax had a key role to play in broadening and stabilising the tax base, but that introducing it as a site value tax was contrary to the spirit of transparency in the market place.
"Site value taxes are difficult for the general public to understand and contrary to the spirit of transparency in the market place" he said. "It seems counterproductive to assess a tax on this non-transparent basis when the Minister for Justice [Dermot Ahern] recently advised that he would be creating the new national property register under the Property Services Regulatory Authority."