According to The Independent.ie, Property prices are rising at the highest rate on record which means that, without a freeze, homeowners would pay substantially larger property tax bills when houses are revalued in 2016.
Ministers are now weighing up whether to announce a property tax freeze in Budget 2015 to give people “clarity” about what tax bills they’re facing.
Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin have already discussed delaying the revaluation period until there is a “bedding down” of the property market.
Mr Howlin told the Irish Independent: “This is a matter I have already discussed with the Minister for Finance. It is a matter for the Minister for Finance and it is something I know that he will be considering between now and the Budget.”
The move would offer some respite to families left reeling from a raft of new charges and taxes introduced over recent years – although it would do little to compensate for the startling level of water charges being introduced.
Last week it emerged that a family with two adult children will be hit with water bills of almost €500 a year, despite Government promises to keep the ‘average’ charge per household at €238.
The Government does not want the recovery in house prices – led by growing demand in the Dublin area – to further burden families with steep hikes in taxes over the coming years.
Senior ministers are looking at keeping the property tax bills at the same level from 2017 to 2019, until the property market evens out.
Mr Noonan is actively considering whether to announce the valuation freeze in Budget 2015, due to take place in October.
But there are reservations in Fine Gael about declaring a freeze a full two years ahead of the end of the valuation period.
A household’s property tax bill is based on two factors – the valuation of the house, and the rate of tax which will partly be set by councils. Councils can reduce the rate by up to 15pc from next year, but only if they have enough funding.
In terms of valuation, the property tax to be paid from 2013 to 2016 was based on how much the house was worth on May 1, 2013.
But that valuation period runs out at the end of 2016. As things stand, it means the property tax payable in 2017 will be based on the property value on November 1, 2016.
A lack of supply is continuing to push prices up. House prices rose by a quarter in the past year in Dublin with the average house value soaring by €20,000 in just three months.
The average cost of a Dublin home now stands at €349,000, up 24.4pc in a year.
As a result of the rise in house prices in the past year alone, homeowners in the capital would already be paying an extra €90 in property tax after a revaluation.
Even outside of the capital, the average cost of a home is €154,000, a hike of 12.6pc in a year, also meaning an extra €90 property tax rise.
Mr Howlin said extending the valuation period would be a matter for Mr Noonan, but there were reasons to consider it.
“Because the property market has come to such a fluctuation, there is still an extraordinary amount of bedding down happening with recovery happening in some urban
areas, the property market flat in others.”
He said that raised the question “whether the current timeline is appropriate or not”.
“That is something that
Michael has reflected upon and, I think, may have a view on for the Budget,” he said.
Mr Howlin said he gave his own view to Mr Noonan during those discussions.
“This is a new tax. From the discussions we’ve had, including a lot of them on the doorsteps in the first part of this [year], the one thing people want is clarity – because it is uncertainty causing the anxiety. I think there will be a view [that] we need to get as much certainty about what taxes are coming,” he said.
Mr Howlin said that in the area of taxes, a situation needed to be created to allow people “make rational decisions about expenditure and planning”.
“We share the same view on that,” he said.
The Labour Party has been pushing for the valuation freeze, and Junior Social Welfare Minister Kevin Humphreys has led the calls.
Environment Minister Alan Kelly also brought up the freeze at a meeting of a Cabinet sub-committee before the summer break.
Source: The Independent.ie