LIMERICK auctioneers Property Partners got in touch to explain some further minutiae on the Local Property Tax coming in for July 1 for the latter six months of next year, and there after. He looks at the tax tiered thresholds to residential and investment properties, and what is liable for collection by Revenue Commission. According to Geoffrey de Courcy, the property charge will be 0.18 per cent on homes worth less than €1m and will be 0.25 per cent on homes worth more than €1m – but only on the element in excess of €1m.
If a home is worth less than €100,000 then the assessed value will be €50,000.
Above €100,000 there are bands of €50,000 and the assessed value will be the midpoint of the band. So if your home is worth €130,000 then the assessed value will be €125,000; if your home is worth €205,000 then the assessed value will be €225,000.
Remember that only 50 per cent of the property tax will be payable in 2013, given its introduction mid-year.
For those with a second property and presently paying the non principal private residence (NPPR) tax of €200, you will continue to pay that tax in 2013, in addition to the new charge of Local Property Tax (LPT) which is estimated to average €157 next year.
From January 2014 on, you will only need pay the property tax, with the NPPR abolished by then, on all residential properties owned.
However weighted the tax payer/ home owner may feel, Mr de Courcy feels it is the conservative lending policy exercised by finance houses that is scuppering growth: “While the measures to ease the way for people who are considering entering the residential market are welcome, the proverbial ‘elephant in the room’ remains – that is the lack of credit available to prospective purchasers. Property Partners members firmly believe that this is the biggest restriction to the recovery of the property sector and house prices.”
As mentioned on last week’s page, Real Estate Investment Trusts (REIT) will be introduced in 2013. REITs are managed property investment funds and allow ordinary investors to invest in property without investing large sums with tax incentives. “Typically, you buy a share in a property fund and then you get income on your share from rent and if property is sold at a profit. If you want out of the fund, you can sell your share. REITs have been promised since this administration came into office”.
Mr de Courcy comment on this move is: “Minister Michael Noonan’s decision to introduce REITs will provide liquidity to the market and allow investors to participate in areas of the property market that they would not traditionally have had the opportunity to enter at a time when property values are low.
“It is our belief that REITs will become more important due to the cap that has been placed on relief on pension contributions, enabling higher earners to divert potential ‘pension’ money into real assets such as real estate investment trusts.”