Five reasons why the new property tax should make you blow your ...

So, after a very rushed debate yesterday in which 88 amendments to the new property tax were debated over 210 minutes, and only one amendment relating to pyrite-affected homes adopted, it seems that the Finance (Local Property) Act 2012 will be? law before Christmas. Although the tax is to take effect from?1st July 2013, the speed with which it has been pushed through has been remarkable.

It was just the?5th December 2012 when Minister for Finance Michael Noonan confirmed details of the new tax in his Budget 2013 announcements, the next day the Thornhill Expert Report was published after languishing on Minister for the Environment, Community and Local Government Phil Hogan?s desk since June 2012 and the day after that, the?7th December 2012, the 70-page Bill was published to give effect to the new tax. It has now been rammed through with alarming speed which is curious given its practical implementation date is over six months away.

Here are five snippets from the Bill, soon to be Act, which might upset you a little

(1) Excluded from the definition of the chargeable value of your home is any amenity land over one acre ? the Bill excludes the following : ?so much of any such yard, garden or other land that exceeds one acre shall not be taken into account for the purposes of this definition?

So if you happen to be a certain Minister for Health with a country manor in countyOffaly with 150 acres of amenity land ? amenity woodland, mostly apparently ? then anything over one acre is to be excluded from the value of your home. And so also will some of the great country homes in the State. So all those lawns, gardens, private lakes and parkland that surround certain homes are excluded from the value of that home.

(2) Where you have a long term physical or mental impairment which is certified by a ?medical practitioner? and your home is ?vacated? then your home is excluded.

Why would that make you upset, seems humane after all. Indeed, but if for the sake of argument, you have a ?10m home and spent some part of the year in sunnier climes and can somehow convince your army of medical helpers to say that the you have a long term impairment, even though you might occupy your home for just a small number of weeks a year.

So why didn?t the Government place a property value cap on this exclusion of say? ?1m so that wealthier people, even if they can get medical practitioners to confirm an impairment would still pay?

(3) If you own a property worth more than ?1m then you will pay the higher rate of 0.25% over the excess over ?1m. That?s fine and people regard that as fair and progressive. But if you have two properties each worth ?900,000 you will pay the lower rate of 0.18% on both rather than 0.18% on the first ?1m of combined value and 0.25% on the excess over ?1m, in this case ?800,000.

Is that fair or progressive?

(4) Penalties under the Act are capped at ?3,000 and you might say, thank goodness for that, at least there?s a limit to what they can come after me for. But if you have a ?10m home on which over ?20,000 a year in tax would be payable, would a ?3,000 maximum penalty be a deterrent to you?

In fact, the maximum penalty of ?3,000 almost encourages those with more expensive properties to try to avoid the tax, so meagre are the penalties should their malfeasance be uncovered.

So why a cap of ?3,000?

(5) Although we await the valuation guidelines to be published by the Revenue Commissioners in the New Year, the Bill says the value will be arrived at

?in such manner and subject to such conditions as might reasonably be calculated to obtain for the vendor the best price for the property?

This is at odd with how a valuer would value a property, and if the following pattern of sales takes place on an imaginary street ? No 1 sells for ?200,000 and No 2 sells for ?190,000 and No 3 sells for ?210,000 but No 4 sells for ?400,000 because at No 4 the buyer was a thicko and the interior of No 4 was extensively remodelled, then the Bill suggests that you will have to value your property at the best price, which would be ?400,000. Professional valuers will normally value a property based on what a willing buyer will pay a willing selling in an open competition where both sides are in possession of perfect knowledge. That wording was eschewed in favour of something that may bite you on the bum.

There are other deficiencies in the Bill which are also a mark of the rushed nature of the legislation ? for example, if you?re selling your property, your buyer will need get confirmation from the Revenue Commissioners that there are no outstanding charges on the property but there are no time limits mentioned for the Revenue providing that information, so you might see the conveyancing delayed by weeks or months and perhaps see the sale fall through as a result of delays on the Revenue?s part ? there is no capping of deadlines in the legislation and that is one of many little deficiencies that we may live to regret in coming years.

Source: http://namawinelake.wordpress.com/2012/12/19/five-reasons-why-the-new-property-tax-should-make-you-blow-your-top/

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