At this stage, it looks as if the new property tax which will be unveiled in the Budget 2013 on Wednesday next, is going to be “another fine mess” and the latest via RTE, is that the value of your property will be frozen for three years from its valuation date.
Which means that for the “valuation date”, it is in your interest to reduce the value of your property as much as possible.
And if you believe the leaks, you need get your property down by at least one band for any measure to have any effect, for example, it is mooted there will be a €150-200,000 band and you will pay 0.2% of €200,000 if your home is worth €150-200,000, say €185,000. So to get a reduction, you will need reduce your home in this example by at least €35,000 so that it sits in the €100-150,000 band where you would, apparently, pay 0.2% of €150,000. That’s a saving of €100 per year or €300 over the reported term of the valuation freeze. If you succeed in reducing the value of your property by two bands, the saving is likely to be €600 and so on.
So today, in what might be a world’s first, we examine 10 ways for you to REDUCE the value of your home [WARNING: The following is intended as a tongue-in-cheek swipe at what, at this stage, looks like another badly-conceived tax or in other words, it is not seriously advocating any measure]
(1) Burn your house down. This would be very much a case of “cutting off your nose to spite your face” and if you expected to subsequently claim on your buildings insurance, then it would be illegal. Ditto, if you live in an apartment or terrace or could potentially cause damage to others. And afterwards, you would still have a site with planning permission so it wouldn’t be completely valueless. But the suggestion is included just to limber up your imagination.
(2) Dirty it up a bit. Perhaps let a bunch of under 5’s loose in it for a weekend, and photograph the evidence. Don’t clean the windows or doors and certainly don’t touch up any paintwork in advance of taking the photographs on the valuation date.
(3) Initiate a planning dispute. Nothing blights the value of property like a major planning dispute, so maybe we might have a buddy system whereby neighbours initiate mutual disputes. Maybe the permission to build the property in the first place could be challenged, after all, a lot of paperwork and plans contain errors. And it is the presence alone of the planning dispute that can reduce the property value. Also you might consider applications for major developments close to your homes.
(4) Paint small rooms in dark colours. In fact take, all the estate agent and property show advice which was aimed at INCREASING the value of your home and reverse it. So make rooms look smaller, remove fixtures like curtains, lampshades, rugs, maybe even carpets before you take the photos to evidence the condition of your home on the valuation date. Maybe go down the dump and find some old doors for your kitchen units or cover your bathroom suite with a (removable) avocado colour. Submit a planning application to REDUCE the size of your property – yes, this may be as unusual as breast reduction cosmetic surgery, but such an application would evidence your intention to downsize, and a smaller home should make for a less valuable home.
(5) Take down the solar panels, wind turbines and disable any other energy or waste system the environmentalists previously told you were ecologically sound and which also made financial sense. After all, these are now likely to boost the value of your home, and you yourself may well have personally paid for the original installation.
(6) Rent the property out below market value. Yes, some folks still believe the value of the property to be solely dependent on its rental income. And property folks love 7% yields or valuing your property at 180 times the monthly income. So if your home is fetching €1,000 a month at present, then cut the rent to €500 for the month in which the property is valued, it would save you €600 over three years.
(7) Invite a family of travelers to camp in your back-garden. Just ask the Hogans, Phil and Paddy – Travellers can be trouble, and if you have a family of them camped out on your property, surely Minister Phil, who will be responsible for the property tax, can’t object to you seeking a reduction in value.
(8) Window decals. Yes, you may well have the most heat-efficient double glazing in the world, and you may even have incurred the expense yourself of installing such glazing, but now, you are faced with your investment coming back to bite you on the bum as you have a house with an enhanced value. But don’t despair, you can get peel-off decals which might give your windows the “Olde Worlde” – and single-glazed – look, like the Tudor criss-cross. Just photograph them and remove them after the valuation date.
(9) Create temporary rights of way over your property – for example, give your neighbours right of way through your kitchen any time of day or night, that sort of thing. Start a rumour of a major development, like a new housing estate, adjacent to your home. Consider renaming your estate “Priory Hall” or “Riverside”
(10) Don’t pay the €100 household tax. Yes, the politicians warned that if the household charge was not paid, it would ultimately be deducted from the sale price of the property. Now that we will have a property tax based on value, having such deductions will reduce the value of your property and not just by the €100 plus interest and penalties. There could be legal costs and fines also.
If the current leaks are correct, then you may actually be incentivized to reduce the value of your home for the valuation date, so although the above is strictly tongue-in-cheek, you may in fact be placed in a position where you do consider ways of reducing the value of your home. Which is just one of many mooted aspects of theproperty tax that don’t make sense. And finally, on a separate but related matter, for the last time, there will not be a 50% discount in 2013 on the property tax, not if the Government expects to raise about €500m – if the mooted average annual bill is €300, then €150 applied to the 2m homes in this country would raise just €300m and when you deduct admin costs, waivers and exemptions and add in the €70m for the second home tax, there is no way that the average bill will be €150 in 2013.