Leading property website MyHome.ie has said the new property tax unveiled by the Minister of Finance in Budget 2013 could threaten the stabilising property market.
Transactions so far this year have already surpassed last year’s total as the market shows some sign of recovery.
However, that has been threatened by the introduction of a property tax at a rate of 0.18% for properties valued up to €1 million and at a rate of 0.25% for homes valued at over €1 million.
In order to help people determine what they will be expected to pay annually when the new tax comes into force next summer, MyHome.ie has developed a calculator at www.myhome.ie/propertytax<http://www.myhome.ie/propertytax
While welcoming exemptions for first time buyers and people buying previously unoccupied properties, MyHome.ie managing director Angela Keegan said they would not have the same impact as the soon-to-be-abolished mortgage interest relief scheme, which offered savings of up to 25%.
“While first time buyers will be exempt until 2017, it in no way compensates for the loss of tax relief at source and we feel this could threaten the continuing stabilisation of the property market.
“The increase in activity we have seen this year has been primarily fuelled by first time buyers. By the end of March next year we will have a better idea what impact this tax has had on the level of transactions” she said.
Ms Keegan also expressed fears that the new property taxes would lead to an increase in rental costs nationwide.
“The owners of properties will be liable for this new tax and we can only predict that they will pass it on to tenants, leading to an increase in rental costs.”
She said, however, that the so-called ‘mansion tax’ – which will see people with homes valued at over €1 million paying a higher rate of 0.25% – is unlikely to have a major impact on the market.
“While the mansion tax received a lot of headlines in the build-up to the Budget we don’t feel that this will have much of an impact on the market given that less than 1% of transactions over the last three years fall into this category,” she concluded.