Michael Healy-Rae
Question:60. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding the property tax; and if he will make a statement on the matter. [6525/13]
View answerThursday, 7 February 2013
Questions (60)
Written answers
The Local Property Tax will be based on the market value of residential properties as at 1 May 2013 and will be self-assessed by liable persons. The Government agreed with the recommendation of the Inter-Departmental Expert Group on the Design of a property tax (the “Thornhill group”) that the Local Property Tax should be centered on the principles of equity, transparency and simplicity. In terms of these principles, it was also considered that a universal liability should apply to all owners of residential property with a limited number of exemptions, in order to keep the rate of the tax as low as was possible. In making its recommendations for exemptions and for deferrals of Local Property Tax (LPT), the Thornhill group had regard to the following criteria:
- Ability to pay
- Reliefs create costs which have to be paid for, either by taxpayers who do not benefit from the relief, or by reductions in public expenditure
- Reliefs should be designed to address clear economic and social policy needs
- Care needs to be taken in designing relief to ensure they are targeted based on need, and there are not unintended and inequitably distributed gains
- The Local Property Tax is intended to be a tax on the benefit from ownership of a residential property
- Such residential properties have monetary and non-monetary values which are independent of incomes
- And that the Local Property Tax is not assessed on incomes.
The Finance (Local Property Tax) Act 2012 contains provisions for deferrals for individuals whose income is under certain limits. These provisions are targeted at cases of need, and have reference to income stressed home owners, allowing enhanced deferrals where there is low income and liability to mortgage interest.
Part 12 of the Act sets out the conditions for deferral of the charge. Where the residential property is the sole or main residence of a liable person and their estimated gross income from all sources does not exceed €15,000 for a single person, or €25,000 for a couple, during the year covered by the return, they will be eligible to apply for full deferral of the LPT charge.
In addition, for income stressed owner-occupiers who have an outstanding mortgage, an adjusted gross income limit will apply. In these cases, the income thresholds of €15,000 or €25,000 may be increased by 80% of the annual mortgage interest payments. This type of deferral is available until the end of 2017.
Owner-occupiers may be eligible to apply for partial deferral where the gross income from all sources is less than €25,000 in the case of a single person and €35,000 in the case of a couple. For income stressed owner-occupiers who have an outstanding mortgage, these thresholds may also be increased by 80% of the annual mortgage interest payments. In these cases the owner-occupier will qualify for deferrals of 50% of the LPT liability and the balance of 50% of the tax must be paid.
Deferrals of LPT will attract an interest charge of 4%, simple interest, which is half of the Revenue default rate. Any amount deferred will be a relatively small part of the overall value of the property, even where the deferral lasts for a number of years.
The Revenue Commissioners will be responsible for the administration of the Local Property Tax and will be issuing guidelines to homeowners in the near future, including details of how to claim a deferral of the tax.
In order to facilitate liable persons and assist with budgeting for payment of the new tax, a range of payment options will be available to pay LPT, including the option to pay LPT in equal instalments. Such instalment payments can be made by way of deduction at source from employment or occupational pension income or from certain payments from the Departments of Social Protection and Agriculture, Food and the Marine. Instalment payments may also be made by direct debit from bank accounts, or by payment in cash through approved service providers. Revenue will announce details of payment options as part of their forthcoming information campaign.
The Household Charge, which was mentioned in the correspondence forwarded by the Deputy, was a matter for the Minister for the Environment, Community and Local Government and has ceased with effect from 1 January 2013.