While rising property prices have been welcomed by those in negative equity or looking to sell, they could soon have an impact on all homeowners.
Next year the value of your house in relation to the local property tax will be reassessed and with homes across the country now worth a lot more than they were during the last assessment in 2013, it’s fair to say that many people’s bills will rise.
Earlier this week the CSO reported that prices had risen again by 0.5% in May, with prices now 13.8% higher than a year ago and 15.2% higher in Dublin.
The government did well to get the property tax over the line in May 2013 at a time when the country was emerging from its worst ever recession. They now face a bigger challenge reforming it as Eurostat figures show that ever since May 2013, Irish house prices have been rising at the fastest rate in Europe.
This means that enormous pressures are building on property bill hikes when they are next assessed in 2016 and it is sure to become a major issue ahead of the next General Election.
Finance Minister Michael Noonan last week confirmed that policy expert Don Thornhill will report to him this summer on potentially modifying the tax.
He will have to take into account the uneven price increases across the state. In the capital, home prices have climbed by almost 41% since May 2013, and apartment prices have soared by over 48%. Home price increases have risen sharply outside Dublin too, by 12.7%.
The Irish Examiner compiled some figures during the week of what impact the tax could have on people:
- 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.
- A Dublin house worth €425,000 and assessed for a tax bill of €765 two years ago is now worth €595,850. The tax bill on this property based on next year’s assessment would shoot up to €1,035.
- Outside Dublin, tax bills are also set to rise, though less steeply than in the capital. The price a house worth €225,000 in 2013 outside Dublin is now worth on average €253,575. The standard tax bill on this property would climb to €495 from €405.
- Outside Dublin, the price of a house worth €425,000 in 2013 is now worth on average €478,125. The standard tax bill on this property would climb to €855 from €765.
- Local authority discounts would do little to modify the bills. The 2015 discounts range between 1.5% in Louth; 3% in Limerick, Longford, Mayo and Westmeath; 7.5% in Kildare; 10% in Cork City and County; and the maximum permitted discount of 15% in Clare and in Dublin City, Dun Laoghaire/Rathdown and Fingal councils. Seventeen councils did not reduce their bills this year.
The new levels of property tax are due to be assessed late next year and an increase in bills could be too much for many households to take.