Discusion: Is revenue undervaluing only to increase the rate applied later?

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10to1

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Home owners can easily become sidetracked on revenues valuation of their property and overlook the rate being applied and what might happen in the future.

For example lets say there are 1,000,000 homes that are liable for the tax. If government set a target of € 130 m in tax and the present value of each property is €100,000 then a rate of 0.13% would need to be applied to achieve the target. (1,000,000 homes * €100,000 (average home value) = €100 billion and a tax at 0.13% = €130 million)

However, Revenue might be inundated with home owners saying their property is not worth €100,000 so instead Revenue devalue all property by let's say 20% (now you are not complaining about your valuation) but apply a rate of 0.18%
€100,000 less 20% = €80,000 * 0.18% = €144 million

Next year who's to say that the rate won't change to 0.20%.

So it's not a question of how much a home is worth but rather what its costing you now in tax and whether or not that tax will change and by how much.
 
There's no doubt in my mind that's what's going on. While they don't want to give people heart attacks about the extent of their negative equity, I'd say Revenue are deliberately keeping the valuations conservative so that people aren't up in arms about being overcharged.

You're right -- once the system is up and running, and bedded in, and people have been reconciled to the idea of paying a non-income-based tax, the government can charge whatever the hell they like, regardless of the valuation, as the percentage is up to them. That's the nature of taxation.
 
Wasn't income tax a temporary tax brought in to finance the war against Napoleon?
 
This is an interesting point but your title does not fully reflect this.

"Could revenue deliberately devalue property in the main?"

I propose changing it to "Is revenue systematically undervaluing properties only to increase the rate applied in future?"

What do ye think?

aj
 
as far as I have read, the rate is set for the next 3 years and then the local authorities can if they so wish (ie will) up the rate form 0.18% to 0.23%
 
10to1 said:
Next year who's to say that the rate won't change to 0.20%.

So it's not a question of how much a home is worth but rather what its costing you now in tax and whether or not that tax will change and by how much.
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I agree with what you've suggested. The rate will change if they need more tax and if they think taxpayers can bear it.
 
I would have thought that was self-evident, as it is with all taxes !?

Rather than asking by how much it could increase in future years (post 2016), I would prefer to know that as the Government is broadening the tax-base and rightly so IMHO, whats next to be targeted.

A recent study/article contended that 5% in Ireland pay 45% of all income tax, and that a further 20% pay no income tax whatsoever. A little more regressive taxation is called for, methinks.
 
I have no doubt that they will increase the % rate that is now being charged after this so called initial period. I can see them putting more resources into having a more detailed valuation data bank by then. While this is a a revenue raising exercise it will be also used as a fishing/trawling exercise. The Government will also be hoping for property prices to improve and I do not see the 1m limit for the lower percentage rate as set in stone. It will be lowered.
 
Kildavin said:
A recent study/article contended that 5% in Ireland pay 45% of all income tax, and that a further 20% pay no income tax whatsoever. A little more regressive taxation is called for, methinks.
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That is interesting, do you have a link? Im not doubting you, I know we have a disproportionate amount outside the tax net, but I didn't know about the 5%.
 
You could try starting here:
[broken link removed]

Table IDS8 on p.15 shows the top 4.36% of income units (i.e. an individual or jointly assessed couple) earned in excess of 100k in 2010, and these people paid 44.65% of the income tax.

If you add in the households earning between 60k & 100k, you end up with the top 14.83% of incomes paying 72.14% of the income tax.

In contrast, the bottom 50% of incomes (less than 27k) paid 2.1% of the income tax.
 
Is revenue systematically undervaluing for future rises

I don,t think so. They are trying to get some handle on the current take from property. I have no doubt that future governments may use homes as a method to get cash.Revenue havn,t YET got a real notion of property values and will get better at it. Daft.ie have done a property valuation web site which seems close. Suggest people use it,if it seems the valuation is reasonable.Otherwise you may be storing up hassle.
 
OT posts have been deleted.

Please keep this thread to discuss the theory that Revenue will systematically underestimate values and that the government will simply up the rate after the introductory period. The net effect will be to raise the same amount of revenue.

10to1 said:
Home owners can easily become sidetracked on revenues valuation of their property and overlook the rate being applied and what might happen in the future.
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Is revenue systematically undervaluing only to increase the rate applied later?

Answer: No.

Why? Because they are not valuing, the owner is valuing.

Whether they adjust the rate in future years will be determined in the same way, presumably, as all other taxes are considered. Proximity to elections and current polls, oh no, sorry - if the economy grows, and revenue increases in line with what tax take we require to pay our debts & run the economy, then reductions might be considered. If it moves the other way, then increases might be considered. Like any other tax.
 
OK,

Is the "revenue on-line guide" that provides indicative property values systematically using "conservative" values for residential properties in the knowledge that a simple rate increase will yield the same revenue in future years?

This gives punters the illusion that they are in some way beating the system while revenue and government will ultimately collect the desired revenue?
 
The online guide has already been shown to be irrelevant. As a tool to help people value their property it is useless.

And there is no way revenue is using it for any estimates either, they have more house specific valuation that they are contacting us with, which presumably they would use in any calculations for revenue take from this new tax.

So to base any suggestion that revenue are using the online guide in some sort of disingenuous tool to trick us really makes no sense. The online tool is, as far as I can make out, useless of anything & everything.
 
sahd said:
Revenue have not got more specific information on each house. The "estimate" on the forms will be even more generic for an area . They don't know exactly what type of house you live in or how many rooms it has .

The online guide is just using the same info as the property price register and averaging out sale prices for different property types in specific areas.
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Why do you say this? It contradicts everything that is being discussed on here, and on other sites and in the media. Have you got your letter? See this post as an example of someone who has their letter, and the letter is not the same value as the house:
http://www.askaboutmoney.com/showpost.php?p=1320211&postcount=123
So it would seem that they are using different data in the letter than is on the site. I dont know what information sources is being used to provide the estimate on the letter, but it would appear to be much less generic than the site.
 
If a majority of people use revenues map and letter with indicative valuation as a method of setting their reasonable expectations for self assessment then yes I can see revenue realising they got it wrong and having to do something about it at the next review date.
 
Sumatra said:
If a majority of people use revenues map and letter with indicative valuation as a method of setting their reasonable expectations for self assessment then yes I can see revenue realising they got it wrong and having to do something about it at the next review date.
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But you're supposed to come up with your own valuation. If you know the Revenue one is wrong, you shouldn't use it.

I think the whole system is nonsense. Revenue's online heatmap and individual letters are completely meaningless. In the current climate of low sales volumes, actual sales prices are either unavailable or too anecdotal to be representative. A professional valuer's estimate is no more reliable than your own.

My own plan is to:
a) take the lowest actual PPR sale price from the handful available in the area,
b) adjust for number of rooms, condition, and other factors, based on my own best guess
c) if the PPR information is old, then discount by the published percentages for house price drops in the last couple of years

I'll happily tell Revenue how I came up with my valuation. If they want to challenge it, they're welcome to tell me how to do it better ... but I can bet a pound to a penny they don't have a better way.
 
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