Fianna Fáil want freeze on property tax levels until 2020

The Government has been advised to freeze property tax levels until 2020 amid concerns that homeowners are facing hikes in their bills after rises in home values.

With house prices rising by 50% in some cases since the crash, it is feared that homeowners could see as much as €360 added to their property tax bill next year.

Fianna Fáil has accused the Government of “failing to find a solution to deal with the looming tax bombshell” ahead of homes being revalued next year.

Finance Minister Michael Noonan is set to receive a review on property tax levels from former public servant Don Thornhill next week.

In a submission for the review, Fianna Fáil says property tax bands should remain frozen until 2020.

The tax is calculated on a home value at May 2013 and is applied for three years. However, homeowners must report updated values of properties to Revenue by November next year.

A submission by party finance spokesman Michael McGrath notes April CSO figures which show house prices in Dublin rose by 39% in the 23 months since the last valuation date, while apartment prices rose by 48%. Nationally, prices have risen by 25% since May, 2013.

The estimated yield from the tax for this year is €440m. Fianna Fáil says extra revenue of between €120m and €150m would be generated from a revaluation of properties. The party claims there is a risk that this extra revenue will simply disappear into general exchequer funding and not specifically help improvements in local services, as it was designed to do when created.

Mr McGrath added: “The Government made considerable play about what it described as providing certainty regarding water bills but the potential impact on families from increased property tax is multiples of what they will pay for water. The same principle should apply in relation to the local property tax.

“It is Fianna Fáil’s view that the revaluation of properties for purposes of the local property tax [LPT] should not go ahead and the existing property tax bands should continue to apply from 2017 to at least 2020 at which time a full review of the operation of the local property tax should take place.”

An analysis by the Irish Examiner this week revealed that many first-time buyers and people living in Dublin and other urban areas face huge rises when the tax bills are assessed next year.

A Dublin apartment valued in May 2013 at €225,000 is now worth 48% more, at €333,675. The tax bill on this property is set to soar from the current standard rate of €405 to €585, if the tax is not overhauled. Outside the capital, a house that was worth €225,000 in 2013 is now worth an average €253,575. The standard tax bill on this property would climb to €495 from €405.

Fianna Fáil’s submission also suggests some tax relief should be provided to apartment owners paying management fees. A credit should be provided against the LPT for up to 20% of the liability in cases where the apartment owner has paid management fee in full, it says, as management services, often ranging from lighting to maintenance of road surface, footpaths and green spaces, are traditionally provided and paid for by the local council in estates.

A department of finance spokesman last night said: “If there are issues that fall out of this [the Thornhill report], the minister will deal with them in the upcoming budget.”