herald

Sunday 22 April 2018

Property tax law blunder hits Revenue

ERRORS: Josephine Feehily
ERRORS: Josephine Feehily

THOUSANDS of homeowners are expected to be refunded their property tax after a major blunder that accidentally exempted anyone who bought a house in 2013.

Sloppy wording in legislation drafted by the Department of Finance and Revenue Commissioners is set to cost them millions.

Property tax laws drawn up this year were supposed to give exemptions to first-time buyers, as well as those who bought a new house from a builder or property developer before 2016.

DEBACLE

But the loosely worded legislation means the Revenue is now being forced to interpret the law as allowing an exemption to anyone buying a property to live in this year.

The latest embarrassing debacle to beset the controversial new tax is likely to affect around 10,000 home-buyers.

Many of these will already have paid the tax but will now have to be refunded.

It can also be revealed that the Revenue has known about the mess since the summer but has failed to publicise it.

So far about 20,000 people have bought residential properties this year. The error means that all those who bought houses or apartments in 2013 will be exempt from the tax for three years, provided they are living in those properties as opposed to being investment buyers.

It is estimated that around half of the purchasers were first-time buyers who would have been exempt anyway, but the other half should have been liable for paying the tax.

The tax on a €250,000 house is €205 this year when just six months were charged, and €405 for next year. Over the entire period in question the homeowner will save about €1,400 – money that should have been paid to the Revenue.

The latest property tax blunder for the Revenue and the Government comes days after Revenue boss Josephine Feehily was forced to admit that her organisation made mistakes in sending out the latest round property tax demands.

A spokeswoman for the Revenue has admitted that officials will be forced to apply the exemption from the tax to all those buying a property to live in this year.

"The result is that a person who purchases a second-hand house and occupies it as a sole or main residence is entitled to the exemption regardless of the fact that they are not a first-time buyer," a Revenue spokeswoman said.

The mix-up happened because the property tax legislation allows two types of buyers, who purchase this year, to avoid the tax up to 2016:

* First-time buyers who purchased a new or second-hand home;

* Also exempt up to 2016 are people buying a brand new house from a builder or property developer.

The Department of Finance, which was partly responsible for drafting the property tax legislation, referred all queries to the Revenue.

hnews@herald.ie

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