Housing bubble won't send tax rates rocketing
HOMEbuyers will be able to benefit from the tax valuation value of a property set by its previous owners, even if they have paid significantly over that amount, the Herald can reveal.
The news comes as the housing bubble in the capital shows no sings of deflating.
It has emerged that houses in parts of Dublin are now costing almost 33pc more than they did a year ago.
And the housing crisis is continuing to push up prices around the country, with a 14pc increase nationally, according to the latest survey by Daft.ie.
There has been some confusion over the status of the Local Property Tax (LPT), especially in cases where a home is bought for more than its declared value for tax purposes.
But Revenue confirmed that even if the price paid for the house takes it out of an LPT band, the property will stay in its original band until October 2016 - provided the valuation was fair at the time it was made.
Asked if the new owner would have to pay LPT based on what was paid for the property rather than its previous declared value, Revenue said the answer was no.
"Once the new owner is satisfied that the valuation was honestly assessed having regard to the guidance available, the valuation as at May 1, 2013 covers the period up to October 31, 2016," a statement said.
However, if there was a "substantial increase" in the value beyond the market norm, the owner will have to prove the value attached to the property in May 2013 was reasonable.
Economist Ronan Lyons said there was an increase of more than 40pc in prices for Dublin city and south Co Dublin compared with their lowest ebb in 2012.
Prices are up by between 17pc and 29pc in the city, and 25pc on average, while Louth, Meath, Kildare and Wicklow have all jumped by 14pc to 20pc.
Mr Lyons said the rocketing prices were a result of the continuing under-supply of houses across the country and said a sentiment survey showed people in Dublin expected prices to rise by 12pc in the next year.
Ireland's ability to attract foreign direct investment (FDI) could also be under threat if the housing crisis continues.
"If you talk to companies like Intel or Google, who employ thousands, they are noticing their staff are finding it increasingly difficult to get somewhere to live," said Mr Lyons. "If we price ourselves out by having high rents, there's a worry about FDI coming to Dublin."