IF THE government is going to introduce a residential property tax and reduce stamp duty, it should say immediately what it plans to do, Keith Lowe, CEO of estate agency Douglas Newman Good (DNG) and Fintan McNamara, chief executive of the Institute of Professional Auctioneers Valuers (IPAV), said yesterday.
McNamara says that uncertainty over property tax plans could add to existing uncertainty in the market.
The Commission on Taxation, which is finalising its proposals this week, is expected to recommend a tax on residential property based on different price bands, for example, properties worth between €250,000-€500,000 or between €500,000-€750,000. It is thought that the average tax would be less than €1,000 a year. It is also expected to recommend cutting stamp duties.
Irish Auctioneers Valuers (IAVI) president Aine Myler wants the government to introduce a moratorium on stamp duty and to instigate a system under which people who have paid stamp duty on property in recent years can credit it against any new property tax.
The calls for clear information come at the end of what has been an unexpectedly busy month for agents: DNG’s Keith Lowe says that July is shaping up to be the agency’s best month this year for sale agreed figures and possibly the best month in the past year. Robert Ganly of Knight Frank agrees that there “is plenty of activity under €1 million” and very good viewing figures for summer.
Agent Felicity Fox, who also reports a strong number of “sales agreed” for July, feared that clients would “run for cover” at news of a property tax but has found that none has yet mentioned it. But she also fears that uncertainty over government plans could affect a market showing some signs of recovery.
The commission’s proposal that homeowners would assess the value of their property themselves highlights the problems of valuing property in a volatile market – and the need for a national house price index, which the IAVI has repeatedly called for.
A spokesman for the Department of Justice said that it is possible that establishing a house price index could be considered for inclusion in the Property Services (Regulation) Bill 2009, expected to be passed by the end of this year.
A register of house prices would also necessitate reform of data protection legislation to allow publication of exact house prices.
Most agents assume that a new tax will apply only to homeowners and not to investors and owners of holiday homes, who become liable for a €200 levy, payable to individual local authorities, from tomorrow. (The final deadline for payment is September 30th.)
However, IAVI chief Myler fears that the levy could be overtaken by a property tax which would apply to all properties, which would be “a death-knell for investors”.
