In response to the report by the Commission on Taxation, the Irish Auctioneers & Valuers Institute (IAVI) welcomes the abolition of stamp duty for principle private residences but said that the Minister for Finance must clarify the position with regard to this recommendation. Otherwise, the already limited number of transactions will grind to a halt; further diminishing tax returns to the Exchequer.

Mr Simon Ensor, from the Residential Panel of the IAVI National Council, said “In effect, stamp duty is an upfront residential property tax, which is transactional in nature, and so its abolition is welcomed. The reintroduction of property tax is somewhat inevitable as it provides the exchequer with a more stable taxation base.”

“However, recent Government comments indicated that they may not be in a position to implement a residential property tax in the forthcoming budget. If this is the case, we urge them to come forward immediately and clearly state that fact, as uncertainty and nervousness cause stagnation in an already troubled property market.

“The IAVI is broadly in support of the basis upon which a property tax would be levied but believe that a seven year moratorium is too short for many house purchasers who paid significant sums in stamp duty for relatively modest properties.

“Another significant issue with this residential property tax is that it may be perceived as an ‘urban’ tax. Money spent on property in rural areas goes much further then in cities, for example, you could own an eight bedroom mansion in Leitrim that’s worth the same as a four-bedroom semi-detached house in Cork.

“Also, a person who owns a large house in a rural area may earn significantly more than someone in an urban area whose house is worth more due to its location. How can these factors be reflected fairly in property tax without some sort of locational weighting? The Commission touched on the income concept but only in relation to retired people. In addition, it will be very difficult for the Revenue to establish the value of a one-off house rural Ireland.

“Also, residential property tax can prove detrimental to homeowners as significant improvements and maintenance may increase the value of their homes and push them into a higher tax band.

“Another significant issue with this residential property tax is that it may be perceived as an ‘urban’ tax. Money spent on property in rural areas goes much further then in cities, for example, you could own an eight bedroom mansion in Leitrim that’s worth the same as a four-bedroom semi-detached house in Cork.

“The IAVI welcomes the recommendation of a valuation database but repeats its continued call for the creation of a National House Price Register so that real time statistical information and analysis can be provided to the market. All of this information is already with several Government agencies and only requires the political will to introduce the statutory framework to facilitate its creation.

“The report recommends that the annual property tax should be self-assessed. The danger of this method of valuation is that it is open to manipulation and some property owners may undervalue their houses to reduce their tax exposure. This also raises questions regarding monitoring and the imposition of penalties.

“The proposal that investors receive no reduction in stamp duty and will be brought within the proposed residential property tax net will be yet another deterrent to investing in residential property. The likely knock-on affect is a reduction in the supply of good quality rental accommodation,” he said.

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