Skip to main content
Normal View

Property Taxation Application

Dáil Éireann Debate, Wednesday - 16 January 2013

Wednesday, 16 January 2013

Questions (86)

Finian McGrath

Question:

86. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding property tax. [58182/12]

View answer

Written answers

The Thornhill Group, the inter-departmental group, chaired by Dr Don Thornhill, established to consider the structures and modalities of a property tax, recommended that owners and not occupiers be the liable persons for the local property tax. This was also the view of the 2009 Commission on Taxation.

The Thornhill Group saw some merit in having an occupier-focused system in that it may be more consistent with the objective of broadening the tax base as every household in the country, as distinct from every owner, would contribute. It would also incentivise efficient use of vacant property in that property owners, on whom liability for the tax in respect of any vacant property would otherwise fall, would have a greater incentive to let the property.

However, some rental properties have high tenant turnover which would present significant difficulties in determining liabilities and collecting taxes. Occupier liability may also give rise to perceptions of unfairness if the occupier on the liability date is no longer the occupier at the time when the tax is payable. Furthermore, the rental value of a property to an owner will be related to its taxable value and, depending on market conditions, tenants will end up bearing some of the cost of the tax by way of increased rent. The Government agreed with the Thornhill Group recommendation that the owner rather than the occupier should be the liable person for LPT.

The Thornhill Group recommended an exception from the general rule that the owner is the liable person in situations where other persons have substantial interests in a property, such as in the case of persons with leases that exceed 20 years or who have a life interest in a property. In such cases, the occupier would be the liable person. This exception is also provided for in the property tax legislation.

The Thornhill Group also recommended that the Local Property Tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates. This is not provided for in the Finance (Local Property Tax) Act 2012 but it is the intention of the Government to introduce such a provision on a phased basis.

Top
Share