BUDGET 2016: Property tax unchanged until 2019

The local property tax rate is to remained unchanged until 2019 to allow time for the Government to consider a new system for calculating the charge.

Finance Minister Michael Noonan said that the postponement would mean that home owners will not be faced with significant increases in their property tax in 2017 as a result of increased property values.

Yesterday’s budget coincided with the publication of a review of the local property tax (LPT) by former civil servant Don Thornhill, in which the postponement of the property tax revaluation is recommended to allow for the development of a new system for calculating the tax rate.

Mr Thornhill makes 13 recommendations across the 83-page report, including a proposal whereby the Government would estimate the property tax rates to be applied in each local authority area in order to raise the minimum yield needed for each council.

“A new system is recommended whereby a minimum level of LPT revenues in each local authority area would be determined by Government,” the report reads.

“This in turn would in turn allow for the estimation of LPT rates for each local authority area and the application of these by taxpayers and Revenue. Local authorities could adjust this rate upwards by a factor of up to 15%.”

Mr Thornhill said that this suggestion would address “serious shortcomings” in the current system of applying a central rate across all local authorities given the variance in property valuations across the country.

“This [current] system does not offer relative stability to taxpayers, local authorities or central government. Some taxpayers, depending on where their properties are located, would be faced by significantly increased tax charges driven by property price changes and some local authorities would incur windfall revenue gains,” he warned.

In a move likely to be welcomed by council managers across the country, the report recommends a move to a system whereby local authorities retain all of the property tax revenues raised in their areas, with those suffering from weaker tax bases still receiving supplementary exchequer funding.

The report also suggests these councils do more to inform the public as to how it spends public funds and the proportionate contribution made by the property tax.

Property Industry Ireland, an Ibec group that represents construction and property businesses, said that the delayed revaluation of housing for local property tax to 2019 would help homeowners over the short term, but that the measure should be part of a wider overhaul of the taxation of property over its entire life-cycle “to create a sustainable, predictable and fair property taxation regime”.

The report recommends the retention of an exemption from the property tax for homes damaged by pyrite.

The report also recommends raising the income limit under which payment of the tax can be deferred to €20,000 for owner-occupiers over 80 years of age or those with stated certified long-term illnesses and disabilities.

Mrr Thornhill also found there has been a high level of compliance with the property tax, with payment rates for 2013, 2014, and 2015 currently estimated at 97%, 97%, and 96% of properties respectively.