€200 Property Tax: Fined for making an investment?

€200 Property Tax: Fined for making an investment?

€200 Property tax on second homes: Are you being fined for making an investment?The deadline date for the €200 tax on second homes is fast approaching but many homeowners of second homes are questioning is this €200 property tax really fair and debating whether or not they should cough up the cash.

Many homeowners say they have already paid enough on the purchase of a second … property and that the government has also received its fair share from all properties purchased, as one blog commenter said “the government has already received over 40% of the proceeds of every single property by way of VAT on materials and services, Income tax on labour, stamp duty and other indirect taxes which they sanctioned such as development contributions and commercial rates!”. So why should you now have to pay an annual €200 property tax?

But be warned, those who miss the deadline date or don”t pay the tax on their second home(s) you will incurred a 10% late fee for every month after the deadline up until the fine is paid. On top of all that you can also expect to receive a fine of up to €2,000 and any outstanding charges and unpaid late payment fees will remain as a charge against the property for up to 12 years, even if the property is sold!

Have your say:

  • €200 Property tax on second homes: Are you being fined for making an investment?
  • Haven’t you already paid this tax when you forked out on stamp duty?

There are 35 comments for this article
  1. John at 9:15 am

    u hit the nail on the head every time shannon we have way too many hanger ons in this country bleeding us dry who are too lazy to work {we had 180,000 on dole during boom years } and dont get me started on foreigners and the people that feel that the state owes them a living , i have two houses through sweat and hard work so F the begrudgers

  2. Peter at 4:28 pm

    Isn’t it quite interesting how the irate private investor judges others on his or her own motives. The assumption is made that all buyers were entering the market to make a killing. What about those of us who were buying to build a family? Buying as our one and only home? Savings could not keep up with house price inflation (averaging 14.9% annually from 1996-2005) and so 100% (or as near as makes no difference) mortgages were the only option available. Just in case maths isn’t your strong point a 14.9% increase on a €300k house is €44,700 – well in excess of the annual industrial wage and not too far off the Institute of Engineer’s of Ireland’s figure in 2005 of €50,850 for an engineer with 6-10 years experience. Equity on parent’s homes was just another way of attempting to get onto the ladder.

    In the working class area where I grew up close to Cork City Centre house prices for a 3 bed semi grew to close to €500k during the boom – outside the reach of the majority of people – and were hoovered up by investors using the equity on previous properties. The result is houses where the rooms are individually rented out and the community is negatively affected by the constantly changing nature of its short term residents. Where houses were built with one parking space (if at all) 3 or 4 cars are owned by the renters. Loud, late night parties are the norm. Graffiti and anti-social behaviour is on the increase.
    Providing a service? I don’t think so. Particularly when so many of the people renting were only doing so because they couldn’t afford a house! Multiple international studies have shown that owner occupiers or renters on long term leases are the most socially stable form of resident in a community.

    While it is quite clear that many small scale investors were taken in by the vested interests spouting rubbish in the media, and have since suffered badly, the fact remains that the ability to even think of investing in a rapidly appreciating market was a luxury when many were struggling to even buy a home. Government data shows that, for instance, in 2002, 2 out of every 3 new houses were being bought by investors. The huge price inflationary effects of such purchasing cannot be denied.

    Sick and tired? Take 2 aspirin and lie down in a darkened room. It might help.

  3. damian at 2:05 pm

    Danny, Fear and Greed very powerful emotional drivers, depending on ones own individual circumstances at a particular point in time.
    To Scream “Sell Sell Sell!” some could see as a sound contrarian indicator that we are nearing a bottom regarding housing prices..

    Mmmm, so far as Boom Bust cycles go,can we say we are stuck somewhere between ‘Wash/Rinse’ phase in the ‘Wash Rinse Repeat’ cycle on the Grand scheme of things?

    The stain of this new €200 stealth tax not guaranteed to be totally removed after the Wash Rinse cycle..

    -d-

  4. danny at 3:46 pm

    Quoting Joe:
    “[b]If the owners of second homes be they investments or holidays homes don’t like being taxed there is a simple solution. Put it on the market – accept what the market will pay for the property and cash in your chips. Hey Presto you will no longer be liable for tax.[/b]”

    [u]Precisely![/u]
    This is what I did, and I’m thanking my lucky stars.
    Better to lose E40k in DEC 2008, than to lose E140k in DEC 2010.
    I still make a tidy profit.

    For the other gamblers in here, if you’re still in the game, then you’ve gambled and now you’ve lost.
    But you haven’t lost big. Yet.
    The Irish Property Market was always a gamble and if you thought otherwise, you’ve been duped by Fianna Fail I’m afraid.

    You still have your home (first house).
    Now cut your losses and sell your losing positions. Pronto.

    Anyone with a second property and two brain cells to rub together will put their property on the market [b]immediately[/b], we are in the [b]bull trap[/b] right now guys.
    First time buyers read the papers too, even the immigrants know about water charges, skyrocketing unemployment and so on. Property looks less appealing than ever.

    2007 – 2nd lowest rate of unemployment in EU
    2009 – 2nd HIGHEST rate of unemployment in EU
    And all the immigrants are going home.
    Check how many properties are available to let right now.

    By DEC 2010, your house is going to lose another 50% of it’s CURRENT value – [u]mark my words[/u]

    Serious revaluations are on the way!
    [i]Knowing when to sell a losing stock is more important than knowing when to sell a winning stock[/i]

    For any of you kids who bought in the last 3/4 years, hang onto your homes. You’ll have negative equity for the next 10 years at least, maybe 15, but you’ll never recover from such a huge loss, even with bankruptcy.
    Anyone who bought before 2005 should still be able to make a small profit or at least break even. Get rid!

  5. Jane at 1:26 pm

    You should be able to offset this as an expense and reduce any taxes due on net income. (This of course assumes that there is a net gain in incomes and for many the second property is a net cost).

  6. damian at 1:03 pm

    We need to get the big government albatross from around our collective necks before it chokes us all to death!!

  7. Mary Nolan at 4:51 am

    Not a particularly well informed comment Michael… What about people who put life savings into investing in a second home to provide for childrens future.. College etc. Now they have homes that a worth a fraction of the price even if they could sell them.. Some people can’t even rent them out and now they’re being penalised for trying to make a sound investment by the same government that drove this country into this state in the first place… most of These big developers you’re talking about already owe so much money they’ve already been declared bankrupt and unable to pay anyway.. It’s the ordinary taxpayer being hit again and again

  8. Cop at 2:45 pm

    Never a truer word spoken Steve. I too invested in a property to provide a pension and was encouraged by the govt to do so. I paid a substantial amount in stamp duty and have a 100% interest only mortgage which is paid by a combination of rental income and money that I out to ut as well. I went into this with my eyes open … and I am fully aware that I am in negative equity and will have a massive increase in mortgage repayments when the ECB rate rises sharply early next year. All this I can accept. However, I have a huge issue when our own government (The Greens really) penalises me further by adding another unecessary tax (in adition to other stealth taxes like PTRB fees, BER fees and the promised carbon “keep the greens happy” tax). The big time investors will not be affected by this tax and dont give a damn about it, only the small one property type ones who worked hard to create the boom. We are the silent majority and also the group least able to effect any type of protest. I wonder why this is? The government and begrudgers see us as an easy target. I would encourage all small time investors who belive this tax to be grossly unfair to contact their local TDs and remind them that you will not be voting for them next time. Personally I will also be using the Lisbon referendum as a means of registering my protest.

  9. Cop at 2:16 pm

    Never a truer word spoken Steve. I too invested in a property to provide a pension and was encouraged by the govt to do so. I paid a substantial amount in stamp duty and have a 100% interest only mortgage which is paid by a combination of rental income and money that I out to ut as well. I went into this with my eyes open … and I am fully aware that I am in negative equity and will have a massive increase in mortgage repayments when the ECB rate rises sharply early next year. All this I can accept. However, I have a huge issue when our own government (The Greens really) penalises me further by adding another unecessary tax (in adition to other stealth taxes like PTRB fees, BER fees and the promised carbon “keep the greens happy” tax). The big time investors will not be affected by this tax and dont give a damn about it, only the small one property type ones who worked hard to create the boom. We are the silent majority and also the group least able to effect any type of protest. I wonder why this is? The government and begrudgers see us as an easy target. I would encourage all small time investors who belive this tax to be grossly unfair to contact their local TDs and remind them that you will not be voting for them next time. Personally I will also be using the Lisbon referendum as a means of registering my protest.

  10. Richie at 12:14 pm

    Hold on now !!! When I purchased my second house, a holiday home for my family, I paid around €20K in stamp duty, I pay my PAYE/PRSI/VAT/Bin Charges/Soon will be Water Charges/Health Insurance/etc … and now I am suppose to pay another tax ….and if I dont pay it in short notice they will add on 10% every month 🙂 this government is gas !!! we were one of the wealthiest countries in europe only 2 years ago … now we dont have a penny so lets introduce double taxation. I have paid tax on my first and second house and gave the government about 50K in stamp duty tax I dont feel I should have to pay a penny more !!!!

  11. Ray at 11:39 am

    people investing in property helped cause the mess that we are in now, they were making incomes that were probably not being declared. they should be taxed more. it’s because of them that i can’t afford to buy a home, apartment or cardboard box.
    if ou make an investment in anything there are always taxes and charges to be paid. 200 euro they have got off lightly.

  12. Siobhan Winter-Smith at 10:00 am

    Second homes? Dear God what about people who cannot afford one home ~ don’t all you bleating capitalists (fascists complaining about social security) care about anyone but yourselves ~ shame on you.

  13. TC at 11:52 pm

    You better act fast then, as you soon may not have an airline to fly you out of the country.

  14. Tom at 10:22 pm

    Personally I think there should have been a tax there all along as it may have kept a little reality in the market and resulted prices not inflating so much. There are so many people that struggled to buy (either 1st time buyers or investors) and are now caught in a trap. €200 is nothing really in the grand scheme of things if you have a house in Dublin and you are getting €1000 – €2000 a month. I am affected by the tax, the only thing that bugs me about it is that it not a) based on market or rental value and b) it cannot be offset against income tax… it is sure to rise. Sure everyone has water rates, carbon taxes and eventually there will be a principle private residence tax, to look forward to.

  15. John at 6:05 pm

    Yes, and we all know landlords are such good little taxpayers.

  16. damian at 5:05 pm

    Simple! Don’t pay it! Mass resistance needed on this, government had grown way too big and as usual turns once again to fleecing her citizens.There is no other way!
    In this wee wonderful island of ours I’ve just about had it with ‘Consumers of Wealth’ excessive sponging from the ‘Creators of Wealth’ and growing exponentially.
    What actually makes this debate laughable is that some take the other side of argument and rightly so but what a defence! Dear oh Dear! They have no argument and are more that likely an employee of the government of some sort past or present. Celtic Tiger has made us all too soft! Sitting Ducks! All in my humble opinion. -d-

  17. Caroline at 3:41 pm

    I think it is unfair. But at the end of the day, everyone is struggling at the moment and has had to put up with unfair taxes and cut backs. I struggled to buy a 2nd home as an investment/pension for my future. What gets to me is how completely ignorant some people are. Where do people get off saying a 2nd home is a luxury???? Looking back now I would not have bought an investment, as I am not only in negative equity in my own home but in the investment also. In addition to this, trying to get a good tenant for the house is very difficult. So that means I have to pay two mortgages until the house is occupied. I am living on e75 per week for food and clothes. We all have to make sacrifices at the moment, so I wish people would stop cribbing.

  18. Tony at 3:40 pm

    I must disagree with Shannon there. Many people on the dole are not lazy, many have recently found themselves victims of redundancy and can’t find a job as there are none out there. I myself have just had to sign on the dole after 20 years of working and paying my own way In life. I’ve applied for 30 jobs in the last 2 months both inside and outside of Ireland and have had just 1 reponse a prospective employer and that was just to say thank you for my application but due to the economic climate the position is no longer available. Not all people on the dole want to be sitting on their backsides.

    Also the so called foreign workers have kept this country going over the last 5 years building a life for themselves and doing the jobs that the Irish couldn’t be bothered to do. Many Irish people have a very short memory when it comes to the “foreign” worker, forgetting that their parents, grandparents, aunts and uncles did exactly the same thing in the 70’s and 80’s by having to leave Ireland to find work abroad, is that not the same siuation?

    Anyway back to the point of the property tax, the way I see it is if people can afford to invest in a second home, charge other people rent to live in it because they cannot afford to buy their own, then investors should be able to pay the sum of €200 per year in tax, the main thing I see is that the €200 will be used to pay some TD’s expenses rather than be put back into both the economy and help finance packages to help peole back to work.

  19. Jack Crowley at 2:41 pm

    If it is for investors, I am ok with this as it is nominal. But if they start taxing first homes, I will have to give back my house as we are taxed too much. If they do what properly run countries do, have the roads, garbage disposal, water, education etc, that come out of those taxes. See Canada as an example of a well run system. But I am afraid the typical Irish politician will tax and not include any value ,,,jsut another corrupt tax.

  20. marian at 2:24 pm

    paid tax on my earnings, paid stamp duty pay mortgage and when i sell i will pay capital gains as well and now being asked to pay now as well while others can squander what they have , get a house from the state and i’m being punished for saving and being thrifty and looking to put something by for my old age so that i’m not a burden on the state i’m not a property tycoon just an ordinary paye worker

  21. Michael Moran at 2:08 pm

    I agree, not all investors did buy off plans, but many are to blame. If you only bought as a pension,you will be rewarded in time. Just think in 20-30 years time you will own outright and can either use the rental income or sell. Just look back to 30 years ago and see what price homes were bought for and are now worth even after crash..You are now paying for the sins or many investors and lots of bankers for feeding to investor greed.

  22. steve at 1:50 pm

    If this is meant to be a so called “wealth tax” then it is not targeting the right people
    Dont believe the papers when they make out all property investors are champagne guzzling jet setters who own a few houses in every county in Ireland!
    Infact most investors are normal people on normal incomes who bought 1 property as an alternative to a pension fund so they can look after their own future and their Children’s future.

    I would hazard a guess that most people who purchased investment propoerties in the last few years are now not making any money on it and are infact now probably in negative equity.
    The tax is not targetting the wealthy so i think at this stage it is totally in-appropriate

  23. Joe at 1:37 pm

    If the owners of second homes be they investments or holidays homes don’t like being taxed there is a simple solution. Put it on the market – accept what the market will pay for the property and cash in your chips. Hey Presto you will no longer be liable for tax.

    I have no time for moaning ‘canny mcsavvys’ who were rubbing their hands in glee as their investment properties increased in value during the boom years but now the shoe is on the other foot and they don’t like it. The pendulum is now swinging the other way and luckily Fianna Fail don’t have the funds to bail out their builder and developer friends.

  24. dominic noone at 1:33 pm

    The introduction of a property tax on second homes is a return to the old 1970s system of imposing rates on domestic property and is totally unfair

  25. Arthur at 1:30 pm

    I and my family moved out of our home to look after my elderly father in his home and I’m being penalised for it. Mark my words, this is just the start; the thin end of the wedge. The charge will go up and up just like refuse charges.
    Next stop water charges and the re-introduction of rates/charges on family homes as well as on rental and holiday homes!

  26. Irate Private Investor at 1:30 pm

    I’m sick and tired of hearing about the plight of the poor First Time Buyer this country.

    You blame investors for the current mess with the property market but the fact of the matter is many first time buyers purchased property at inflated prices and with the aid of release of equity from their parents’ homes as they were eager to get on the property market and make a kill. No one asked you to sign loan applications for 100 per cent mortgages either !!!. You only have yourselves to blame !!!

    As an ordinary tax payer earning an ordinary salary I purchased an investment property. I paid a hefty sum of my hard earned savings to the Revenue in respect of stamp duty and also paid the VAT on Builders labour and materials contained within the contract for sale. I cannot derive an income from the rent I receive on the property as that would be subject to an additional tax by Revenue. In addition, if I ever do sell the property in the future I will have to pay an additional 25% of on the proceeds of sale to Revenue by way of Capital Gains Tax. I also pay an annual management company service charge on the property to a Private Management Company in the sum of €2,000.00 and I now find I have to fork out a further €200.00 by way of a new annual property tax to aid the City Council’s budget.

    I wouldn’t object to a property tax to the Council if they collected the refuse and contributed towards the management of private developments thus reducing my management fees. I would also like to see the government introducing a property tax on commercial properties and holiday homes as I’m sure many of the real fat cat investors fall into that category !!!!

    So if anyone is being screwed in this sorry country of ours to date its the “overtaxed” private investor who is merely providing accommodation for individuals the government have failed to date !!!

  27. Colm at 1:18 pm

    People with second homes as investment properties bought them as a way to make money. They thought they could ride the market and watch their investment grow by double digit figures every year. And even better they increased rents to cover the mortgage. It was seen as money for nothing. I wouldn’t so much see the €200 as a tax on investment or landlords more a tax on this stupid greed.

    People with second homes as holiday homes get even less sympathy from me. If they can afford a second home which they use 2-3 months in the year then they can afford €200. Simple as that.

    Also it now appears that actual homes are going to be taxed from next year. The speculation is that the tax on an average family home will be between €1000 and €1500. In that case €200 seems very small. In fact I would urge the minister to at apply at least the same level of taxation on investment homes and holiday homes as he plans to impose on actual homes. It makes no sense to tax an actual home €1500 and a holiday home just €200.

    Ideally make make investment/holiday home owners pay the property tax we will all have to pay plus the €200 second home tax top up.

    We need to get away from the idea that those who can invest can afford to pay less tax. The Section ** schemes made people millionaires while they paid little or no tax. Meanwhile the average PAYE worker on a modest wage couldn’t afford the accountant to get him off paying tax.

    Well what goes around comes around. If a section of society did not carry their fair share of the taxation during the boom then they must pay more now. This applies for those at the top with their property empires and also those on the bottom who sat on the dole while we had to import workers from across the world to keep the economy going (but that’s another topic).

    Society cannot afford to carry the greedy or the lazy any more.

    As to the previous poster who said he was sell his properties and leave the country now that the good times were over well we don’t want you if you aren’t willing to pay your way. Dublin Airport is at the end of the M50. Don’t leave the door hit you on the arse as you leave.

  28. Mark Whelan at 1:06 pm

    Apart from the obvious fact that holders of investment properties have already made substantial direct tax payments via stamp duty, and indirectly via VAT (on the construction of the property) they also now are liable for tax on the rental income so as a group they have made and continue to make a material contribution to the exchequer. The concept of a property tax being set at a fixed amount is crude because it takes no account of the gross or net current value (net of borrowings) of the asset or property owner. The current tax amount of euro 200 is not in itself not a very large amount of money however the type of increase to this tax being suggested in some quarters (ie euro 2,000) takes this issue to a new level and if applied as a fixed amount would be grossly unfair. The description of owners of 2nd properties and their attitudes when they bought properties in the past made by Michael Moran today is an easy generalisation. Just as many investors bought for genuine long term purposes looking to provide for their retirement (rental income as a form of pension), or for their children, and not just a quick ‘buck’. The real issue that drove the market for much of this decade and squeezed first time buyers were dreadful government policies in regards planning and development (leading to the undersupply of houses from 2000 – 2005) and the easy availability of bank credit which led to excessive borrowing fuelling the price boom.

  29. Shannon Murphy at 12:54 pm

    The Irish government are ruining the country because all the decent people who are not too lazy to get up off their backsides to earn a living and make a good life for themselves are being penalised all the time while the laze abouts on the dole (many who also moonlight) get away scot free. The genuine Irish worker is working for the likes of these and also the influx of foreigners (many of who are on the dole/taking handouts) who make no contribution whatsoever to Irish society. What’s gonna happen is that anyone with a head of sense, will sell their property and get the hell out of Ireland and leave the government to use their heads once and for all instead of relying on the good ole reliables, always there to take money from! It’s disgusting, Ireland has gone downhill so much I can no longer refer to it as home! What is the point in trying to look out for your future when you’ll just get screwed by your own so called government?

  30. Jimmy at 12:51 pm

    A couple of years ago when the volitility of pensions was all over the news the government encouraged people to invest in property as a pension alternative. What the first poster above has done is completely overlook this type of investor. These are not big time investors but ordinary people who probably only have one investment property that was purchased with their furure retirement in mind. Don’t forget that the banks were giving up to 100% interest only loans towards these inveatments. VAT would have been paid on the purchase also. Now what is happening is that these type of people are being lumped in with big time investors. They have already been penalised for their investment through negative equity factors and falling rents putting them in a precarious financial position. Putting a blind accross the board tax in place that fails to factor in peoples ability to pay and makes no distinction between the people who were attempting to secure their own retirement and the investors with twenty or thirty properties to their name id a recipe for disaster. Fairness is an essential ingredient for any government when devising new taxes and our present government is most definitely devoid of all fairness. Putting blind insensitive accross the board taxes in place could potentially hurt a lot of people who are already seriously struggling.

  31. grainne Koberl at 12:35 pm

    Just reading the comment above….not all investors bought off plan..me for one..paid over the odds, rent does not cover the mortgage….I just wanted a property as a pension in my future old age…as pensions are so unreliable….It is disgusting that all investors are being targeted and treated the same when some of us are struggling.

  32. grainne Koberl at 12:32 pm

    It is Disgusting….The goverment are taxing landlords again….Don’t get me started…I will be thinking with my feet and exiting Ireland ASAP and off loading any investments I have as I am disgusted with the whole situation…..

  33. ciaran at 12:28 pm

    Is this article intended to be a serious one?

    Of all of the plights in today’s society,
    we are drawing attention to that of those who have the undeniable, significant luxury of owning a second home (or indeed multiple properties,
    when many have no home whatsoever.

    Now these people have to face the torture of a full €200 in tax.
    People with second homes have demonstrated that they can spend €200k (at least) on something that they clearly dont need.

    And now we are wondering if they can part with €200 to fund schools, hospitals etc?

    Its clear that this will be just the start and hopefully if our government follows their plan, this tax will be increased to a more reasonable figure like €2000, which would still be only 1% of the min price of the second home which the buyer has clearly shown they can afford.

  34. sherif kelada at 12:19 pm

    it is unfair because it is already taxable in income tax!!!
    how we pay taxes twice for the same????

  35. Michael Moran at 12:18 pm

    I don’t feel sorry…Investors are one of the causes to the property bubble, they were not concerned when they were buying houses from off the plans and squeezing out the first time buyer…. They could not buy them fast enough just thinking of how much they were going to make and how great it was to be telling people about there latest property buy. I am sorry but I have no sympathy.

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