Families face property tax hikes of up to €500 after house price surge

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Paul Melia

Thousands of homeowners face a massive hike in their property tax bills unless sweeping changes to the unpopular levy are made.

Some families could be hit with annual hikes of almost €500 because property prices have soared since the tax - based on the market value of the home - was introduced in 2013. Back then, the 'average' cost of a home nationally was just under €150,000, which incurred a bill of €225.

However, the latest house price data from the Central Statistics Office (CSO) shows this national average has since increased to €256,000, which means bills for 'average' homeowners will rise to €495 - an increase of €270.

Among those hardest hit will be families living in Clifden, Co Galway, where an average home was priced at €52,500 in 2013 but has since soared to €305,000. Under the existing system, the tax will rise from €90 a year to €585.

Other areas facing high increases are Dublin 7, where bills could rise from €225 to €650; Newbridge in Co Kildare, where rising prices mean average bills could increase from €90 to €495; and Dublin 14, where families could face a rise from €585 to €956.

The Local Property Tax (LPT) is assessed at 0.18pc of its market value. It is designed to fund local services, and replaces direct exchequer funding for local authorities.

For properties valued at over €1m, the first €1m is based on a 0.18pc multiplier and the balance at 0.25pc.

But since 2015, local authorities have been free to adjust the rate up or down by a maximum of 15pc. In Dublin, three of the four councils have reduced it by 15pc, with Fingal reducing it by 10pc for this year. This means homeowners in these areas pay a lower rate.

Conversely, those living in other counties which increased the rate pay more - Waterford City and County Council increased it by 2.5pc, Limerick City and County by 7.5pc, Wexford and Laois by 10pc, and Longford by 15pc.

While the Government has insisted that any increases will be modest, it has yet to set out how it intends levying the charge without unduly affecting family and local authority finances. It has faced calls to ditch the tax or extend exemptions to cover property owners who may be asset-rich but cash-poor.

"I know people feel that because house prices have gone up a lot in the last four or five years that it means their property tax will go up by that amount," Taoiseach Leo Varadkar said last month.

"We are going to make sure that doesn't happen. We want to make sure that the amount of revenue collected by the local authorities from property tax is roughly the same and that would mean making sure nobody faces a sudden increase in their property tax."

While a review of the LPT is underway, there is as yet no date for its publication, the Department of Finance said. In the meantime, families face growing uncertainty as to what their bills for 2020 will be.

Fianna Fáil housing spokesman Darragh O'Brien said the Government needed to outline its proposals as soon as possible.

"We made a detailed submission to the review on the basis of ensuring there are no significant increases for homeowners," he said.

"Homeowners and local authorities need certainty. I don't understand the delay. We made a submission in advance of last summer and it should be relatively simple to do.

"For planning purposes, it needs to be [done] before Easter at the very latest. We need to see what's in and if we agree with it. It has to be open for scrutiny in the Dáíl."

Analysis of 'average' selling prices for homes, based on 130 Eircodes, shows that under the existing system, few areas will enjoy a reduction.

There are eight areas in Dublin, Cork, Cavan, Monaghan, Tipperary, Kerry and Limerick where prices have fallen, resulting in a lower bill.

The sharpest drop has been in Rush, Co Dublin, where bills would fall from €675 to €445.

There are 15 areas in Clare, Cork, Donegal, Kildare, Leitrim, Mayo, Roscommon, Sligo and Tipperary where prices have remained relatively stable, meaning no change to tax bills. However, in the remaining 107 areas prices have risen - paving the way for higher bills unless changes are made.

The Government has ruled out the introduction of a site value tax, which some experts believe is a fairer way to tax property because it is based on the value of the land rather than the building.

Among the options being considered is reducing the rate of the levy below 0.18pc, which would limit the tax burden on families while protecting council finances.

An exemption for those who bought or built their own home since 2013 will no longer apply, which is expected to result in an additional 10,000 households being liable.

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