New property tax

Z

z106

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What do people think of thsi new property tax that may be introduced?
My unerstanding of it may be incorrect but am i right in saying that anyone that owns a second home or a buy-to-let will be subjected to a tax?
Is my understanding correct?

Personaly I hink introducing a blanket tax on anyone just because they own a second property is unfair.

Back in the day property buyers who paid exceptionally high stamp duty by international standards were all told that at least we don't have a propety tax.
Now it seems that people that bought in the last couple of years will have paid both crazy high stamp suty as well as now being subjected to an ongoing property tax to top it all off.
This to me seems draconian and unfair.

A lot of people who bought a buy-to-let in the last couple of years now have a significant paper loss.

Surely the idea of tax is that people should give over part of their profits to the tax man.

MAny people these days are at a loss due to taking on a second property.
Obviously like any business that is the risk they took on and that's the way the cookie crumbles and all that.

However I certainly don't see why they should be subjected to a further property tax while their business runs at a loss.

Why not target profit making businesses instead?
 

kkelliher

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669
the main problem with this idea is it is not balanced with the need.

The government are looking at this as a way of stabilising income streams into them but with directing it at second homes they wont get this as depending on the level of the tax, they may well end up killing the market and a high % of those with second homes will move them off shore.

They may also find that as an "expense" to the business of renting this may result in a reduction in income tax on the rental income. Assuming they follow the lead of other countries where it is classed as an expense.

The other main problem I have with it weather it will take any account of the fact that stamp duty has already been paid on the property? Will there be a rebate for those who already paid their due taxes?

Also isnt it great to hear all the red hot socialists on Joe Duffy claiming taxes on all those who are trying to make money. They seem to forget that without those out there trying to make money there will be no economy. I very much feel the begrugury of the irish knows no bounds
 
Z

z104

Guest
If a property tax is brought in it will just raise rents. It's very simple. The landlord won't be at a loss so it will become a tax on renters. This may persuade renters that they would be better off buying. So it may have the effect of kick starting the housing market again.
 

SteveW9

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Messages
87
What do people think of thsi new property tax that may be introduced?
My unerstanding of it may be incorrect but am i right in saying that anyone that owns a second home or a buy-to-let will be subjected to a tax?
Is my understanding correct?

Personaly I hink introducing a blanket tax on anyone just because they own a second property is unfair.

Back in the day property buyers who paid exceptionally high stamp duty by international standards were all told that at least we don't have a propety tax.
Now it seems that people that bought in the last couple of years will have paid both crazy high stamp suty as well as now being subjected to an ongoing property tax to top it all off.
This to me seems draconian and unfair.

A lot of people who bought a buy-to-let in the last couple of years now have a significant paper loss.

Surely the idea of tax is that people should give over part of their profits to the tax man.

MAny people these days are at a loss due to taking on a second property.
Obviously like any business that is the risk they took on and that's the way the cookie crumbles and all that.

However I certainly don't see why they should be subjected to a further property tax while their business runs at a loss.

Why not target profit making businesses instead?
I think its a great idea to tax 2nd properties, people who bought 2nd houses for investment purposes using the equity on their orginal house, priced first time buyers(who were only trying to get somewhere to live) out of the market.
Their greed is partly responsible for the mess we are in now so its time for some payback. Its great that eventually(probably in about a years time becuase people are still asking insnae prices for crap houses) that a 1st time buyer may actually be able to afford somewhere decent to live.
 

David_Dublin

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459
It'll certainly affect the margins of the property investors, and therefore have an effect on the demand for investment property. So we're bound to see a knock on effect on house prices, but also on availability of rental property. Prices for FTBs might become cheaper, but rent will most likely rise. When mortgages are not exactly readily available there may be unwanted or more complex outcomes than might seem obvious.

As has been seen before in this country, tinkering with the property market without full examination & understandin of the possible outcomes is a dangerous game. But given this goverments ability, that is exactly what I expect to happen. In prinicple, I think the idea of taxing properties other than the primary property is a good idea. I have no doubt that the cute investors will find loopholes in the legislation so that in reality only the people with second home as a holiday house or city pad will end up paying the tax.

In short, this needs a lot of further thought by clever people (so I'll opt out at this stage) before I give it a full thumbs up. I dont really have any issue with it hitting the property investor per se, though having been so pro the investor I doubt FF will be that brave.
 

Mr DT

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220
People who bought a second house for investment purposes should have done so for the long term, therefore they have taken on the risk that over time things will change. There could be positive changes (lots of that in the last 15 years) or negative changes (lots of that for the next XX years?)

Its "unfair" that the exchange rate has moved the wrong way by 30% if you are exporting to the UK...... but if you are to survive....you adapt.

Surely, If tax goes up from €200 to €600 pa and people can't afford it then they were sailing too close to the wind anyway.
 

kkelliher

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669
I think its a great idea to tax 2nd properties, people who bought 2nd houses for investment purposes using the equity on their orginal house, priced first time buyers(who were only trying to get somewhere to live) out of the market.
Their greed is partly responsible for the mess we are in now so its time for some payback. Its great that eventually(probably in about a years time becuase people are still asking insnae prices for crap houses) that a 1st time buyer may actually be able to afford somewhere decent to live.

I would more than welcome your backup for these statements as this is exactly the reason we are all in the sh*t.

Buying a second home is no more different that investing in shares, investing in a business, or any other investment.

To say "its time for payback" is the most rediculous statement to make in a time like we are now in.

I can also all but guarantee that in some way you have received some benifit from the property boom that we had for the last ten years as it underpinned our economy. Its not the 100% fault of those who invested money in property for our current circumstance and you cannot like in every other instance put all "second home Buyers" into the same braket as "property speculators".

Prices increased because of demand. Demand from investors (as there was a huge demand on rents from those who DID NOT WANT TO BUY as much as those who did). A high % of the foreign workers in this country have no asperations to own a property in Ireland as they are simply here to earn money to one day go home, like the Irish have also done in our history.

Payback as you put it will not solve any of our problems and in fact will make it worse as most of those who have a second property only are ordinary people investing for the long term. They are also loosing their jobs like everyone else.
 

Clohass

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78
Can I point out that not everyone who owns a second home is a necessarily in it for profit(rental) or pleasure(Holiday).

I purchased a house which my elderly mother lives in (rent free) and which it costs me money to provide and maintain.

I'm obviously not looking forward to paying a tax on this property on top of what it already costs me.

I'd ask some of the the more extreme posters to bear things like this in mind rather than seeing 'fat cat' and 'raging capitalist' every time there is a mention of someone owning more than one property.
 

kkelliher

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Messages
669
People who bought a second house for investment purposes should have done so for the long term, therefore they have taken on the risk that over time things will change. There could be positive changes (lots of that in the last 15 years) or negative changes (lots of that for the next XX years?)

Its "unfair" that the exchange rate has moved the wrong way by 30% if you are exporting to the UK...... but if you are to survive....you adapt.

Surely, If tax goes up from €200 to €600 pa and people can't afford it then they were sailing too close to the wind anyway.

My main objection which is not been clearly understood is that those who purchased 2nd properties in ireland have added greatly to the economy already by paying stamp duty on the purchase, VAT on the new build, and income tax on the rental stream.

There needs to be a clear understanding of the difference between investment and speculator.

Are we now going to put a new tax on those who invest in shares? all they currently pay is stamp duty just like on property. There has been massive evidence of speculators in shares been responsible for some serious problems in that industry which has caused alot more problems than the property one.

Risk is in everything you do, you cant just isolate 2nd properties to take up the slack on everything else.
 

kkelliher

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669
Can I point out that not everyone who owns a second home is a necessarily in it for profit(rental) or pleasure(Holiday).

I purchased a house which my elderly mother lives in (rent free) and which it costs me money to provide and maintain.

I'm obviously not looking forward to paying a tax on this property on top of what it already costs me.

I'd ask some of the the more extreme posters to bear things like this in mind rather than seeing 'fat cat' and 'raging capitalist' every time there is a mention of someone owning more than one property.
100% agree and this is what people need to realsie
 

David_Dublin

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459
Youre in the minority so most greedy people did it for profit and pleasure
Doing something for profit does not make you greedy.

If our government has failed to manage the property bubble with the many tools it might have used in the last 10 years or so, the fact that people have taken advantage of that should not be held against them.

The motivation for suggested changes to legislation should not be payback. If there is need for additional revenue into the government then all possibilities should be explored. I imagine that many european countries have property tax that is not limited to the second properties, but is also applied to primary residence.

Personally, I have no problem seeing the speculators taking a hit if this tax was introduced. I appreciate that they have contributed in Stamp and Tax on income and VAT etc, but I am still uneasy that by doing very little a lot of people made a lot of money. That's capitalism I suppose, but it goes both ways, now the risks of their ventures may come back to them
 
R

rabbit

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by doing very little a lot of people made a lot of money.
A lot of people have lost a lot of ( borrowed ) money as well as their own money. People were encouraged by the govt among others to invest in property ( section 23, section 27 etc ) and created a lot of construction jobs in the country, and paid a lot of tax in the process. Now many ( in parts of the country ) of these buildings remain empty and in negative equity. Its not good enough for the govt to kick these "investors" while they are down. Only a third of the dwellings in Leitrim are occupied for example. Consider those who bought in 2005 and 2006 and who have found the whole govt inspired thing a scam and a liability rather than an asset to be taxed. People are committing suicide over our government created problems.
 
Z

z106

Guest
Doing something for profit does not make you greedy.
Exactly.

As some other poster said when some people see someone with more than one property they automatically think greedy capitalism.

Why shouldn't someone try to gain further income from entering the property business?
WHy does this particular business have the bad name above any other business?
Would the same stigma be attached to someone who set up a second business selling hot dogs to supplement their income?

Landlords do provide a service you know.
They do rent out these propeties after all.

What is the alternative?
To only allow people buy a home ?

Where do renters live in that case?
There seems to be a lot ranting that is not properly thought through directed towards people who are in the property game.

It's just another business.

And yes- family home prices did rise more due to teh boom.
Howebver - that was primarily due to cheap credit as opposed to speculators in my book.
(i.e. if investors were hypothetically banned prices would still have risen significantly)
In its height I think 25% of tehmarket was made up of investors/speculators.
Presumably most of these properties were rented out at any one time- therefore they were needed as they provided a service
Speculators contributed to the rest. As to how significant an impact is hard to judge but had only speculators been banned we would still be in this mess we are in.

The question is why is the property business singled out above other business?
Property investors have paid significant amounts of taxes already through stamp duty and vat etc. Presumably far more than people that have not entered the property game.

A lot of landlords are now running their business at a loss due to the downturn.
So in a nutshell - my point is surely profit making businesses should be taxed before loss making businesses.

Also - someone esle said that a change in tax laws anyone takes in getting into business.
I'liek to know how they felt if the business they are involved in was singled out for a supplemntary tax.
I'm presuming they woud not use that line as quickly in that scenario.
 

Thomas22

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Messages
251
It'll certainly affect the margins of the property investors, and therefore have an effect on the demand for investment property. So we're bound to see a knock on effect on house prices, but also on availability of rental property. Prices for FTBs might become cheaper, but rent will most likely rise. When mortgages are not exactly readily available there may be unwanted or more complex outcomes than might seem obvious.

As has been seen before in this country, tinkering with the property market without full examination & understandin of the possible outcomes is a dangerous game. But given this goverments ability, that is exactly what I expect to happen. In prinicple, I think the idea of taxing properties other than the primary property is a good idea. I have no doubt that the cute investors will find loopholes in the legislation so that in reality only the people with second home as a holiday house or city pad will end up paying the tax.

In short, this needs a lot of further thought by clever people (so I'll opt out at this stage) before I give it a full thumbs up. I dont really have any issue with it hitting the property investor per se, though having been so pro the investor I doubt FF will be that brave.
The over supply of properties across Ireland will prevent most landlords from increasing the rent. In all likelihood they will just have to absorb the additional costs.
 

David_Dublin

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Messages
459
The over supply of properties across Ireland will prevent most landlords from increasing the rent. In all likelihood they will just have to absorb the additional costs.
If they are in a position to absorb the cost, yes. With rents already declining there is a point at which that wiill not be an option, in which case they may be forced to sell.

Interest rate movement will also prove a factor as to the effect. From what I read, many of these investment properties have been leveraged on interest free 100% mortgages. When the 3 or 5 years of the interest free term is up who knows what banks will do, it is up to them if they continue to offer the facility. If rates go up in the next 18 months you may find a flood of previously rented accommodation, so less units on the market, higher rents resulting. There are so many scenarious, ask Peter Bacon.
 

kkelliher

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669
Youre in the minority so most greedy people did it for profit and pleasure

Minority - I dont think so, and again how do you back this up.

Bid Difference in those who buy for long term, rent them out, maintain them, pay taxes on them against those who buy and sell within a few months to a year.

The ability or want for someone to make money is not greed.
 

SteveW9

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87
I would more than welcome your backup for these statements as this is exactly the reason we are all in the sh*t.

I can also all but guarantee that in some way you have received some benifit from the property boom that we had for the last ten years as it underpinned our economy.
I received no benifit from the property boom whatsoever.
I work in IT and I have rented for the last 6 years and will continue to do so until an average house is 3 times average salary.

and i never said it was 100% second home buyers fault please learn to read.
 

kkelliher

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Messages
669
I received no benifit from the property boom whatsoever.
No way thats true. I can guarantee weather you know or not but your IT job is linked in some manner to the boom in Ireland which was spurred on by the Property Industry.

[/quote] I have rented for the last 6 years and will continue to do so until an average house is 3 times average salary. [/quote]

No disrespect but I cannot believe someone in IT has been unable to buy a house for over 6 years. I know single nurses and apprentices who have purchased their own houses. You could easily have gotten a mortgage (which was the problem) over than period.

[/quote]and i never said it was 100% second home buyers fault please learn to read.[/quote]

No problem reading, and no problem understanding your line

[/quote]Their greed is partly responsible for the mess we are in now so its time for some payback[/quote]

Can you back this up "responsible for the mess we are in now"?
 

SteveW9

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87
No way thats true. I can guarantee weather you know or not but your IT job is linked in some manner to the boom in Ireland which was spurred on by the Property Industry.
I have a job because a Multinational software company came to Ireland in 1994 because of low coporation tax and an educated workforce believe me it has nothing to do with with the property boom.

No disrespect but I cannot believe someone in IT has been unable to buy a house for over 6 years. I know single nurses and apprentices who have purchased their own houses. You could easily have gotten a mortgage (which was the problem) over than period.
Yes I could could have easily got a mortgage but were not stupid enough to want to pay 500k for a 2 bed appartment and I also did some research on the market even a child will tell you bubbles burst.

Their greed is partly responsible for the mess we are in now so its time for some payback. Can you back this up "responsible for the mess we are in now"?
People who bought for investment purposes kept prices inflated and misfourtunate people WHO HAD TO BUY A HOUSE TO LIVE IN from 2005 have been sucker punched with really bad negative equity today.
 
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