Dáil Éireann Debate, Wednesday - 9 July 2014
72. Deputy Thomas P. Broughan asked the Minister for Finance his views on reforming the local property tax in a manner such that the cost of mortgage repayments and the cost of outstanding mortgages would be considered as part of the determination of a homeowner’s property tax liability. [30253/14]
Amharc ar fhreagraThe Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered and how a residential property is to be valued for Local Property Tax (LPT) purposes. LPT is a self-assessed tax and it is a matter for the property owner to calculate the tax due based on his or her assessment of the chargeable value of the property. The chargeable value is defined in the 2012 Act and means the price that the unencumbered fee simple of a residential property might be expected to fetch on a sale on the open market were that property to be sold on the valuation date of 1 May 2013 (and subsequent valuation dates), in a manner that would secure the best possible price for the property. I am further advised that the cost of mortgage repayments or the cost of outstanding mortgages, have no bearing on the amount of LPT due as the market value of the property is the sole determinant of the LPT liability for that property.
The Deputy will be aware that the LPT legislation also provides for a system of deferral arrangements which include an option for full or partial [50%] deferral of the LPT liability subject to certain income thresholds and provided that the claimant is an owner-occupier of the property. Where the property was purchased with a mortgage, these income thresholds are increased by 80% of the gross mortgage interest payments. Details of all deferral options are available on the Revenue website at http://www.revenue.ie/en/tax/lpt/deferring-payment.html. I am satisfied that the deferral arrangements outlined by me above are the most appropriate way to recognise the effect of mortgage encumbrances in the LPT legislation. As the Deputy is aware, the rate of LPT was set at 0.18% for properties valued below €1m, and 0.25% in respect of that part of a property value that exceeds €1m, with very limited provision for exemptions. Reforming the Local Property Tax in the manner referred to by the Deputy could have a significant negative impact on the yield in the absence of an increase in the rates of this or other taxes.
