The vast majority of people owning high-value homes will only pay the ordinary level of property tax after the Government shied away from imposing a full-strength mansion tax.
A higher rate of tax will apply to homes valued at over €1m, but only on that portion of the value that exceeds the million mark. The bulk of the value will be taxed at the standard rate. In practice, that means a house valued at €1.2m will be taxed at a rate of 0.18% on the first €1m and at 0.25% on the remaining €200,000, giving a tax liability of €2,300 instead of the €3,000 that might otherwise have been due if the higher rate had applied to the full value.
While the late introduction of the mansion tax is understood to have been key to securing agreement between the coalition partners on the property tax, and has been credited with reducing the proposed standard rate property tax from an anticipated 0.2% to 0.18%, the actual value of it to the exchequer is unclear.
With plummeting property prices over the last six years, the number of homes breaking the million euro barrier also dropped dramatically, leaving relatively few falling into the mansion bracket.
Fianna Fáil said just 16,000 of the country’s 1.6 million homes could be valued as mansions but other estimates put the figure even lower.
On the MyHome.ie website yesterday, just 49 homes were listed in Cork city and county with an asking price in excess of €1m compared to 4,288 with a value under €1m.
The listings for Dublin city and county included 158 million-plus properties compared to 3,938 with a lower price tag.
In both regions, the vast majority of homes fell into the €300,000 or under bracket — 3,503 in the case of Cork and 2,685 in Dublin.
The Campaign Against Household & Water Taxes said the mansion tax had little value to the State.
“It is just an attempt to divert attention from the fact that the average family will be expected to pay approximately an initial €300 per year in this tax,” said spokesman, Gregor Kerr.
Angela Keegan, managing director of MyHome.ie, said the mansion tax alone was unlikely to have a major impact on the property market. “It received a lot of headlines in the build-up to the budget but less than 1% of transactions over the last three years fell into this category,” she said.
© Irish Examiner Ltd. All rights reserved