The new property tax that will take effect from 1st July 2013 was rushed through the Dail before Christmas, with the debate about its many and draconian provisions cut farcically short – in the end there were about three minutes per proposed amendment allotted for debates, and it was a pantomime display of democracy in action to see a Budget announcement one day, an expert report (which had been sitting on a minister’s desk for six months) published the next day and the next day still, 70-pages of new legislation.
In the rush, you might have missed some of the detail of the new household charge. And you might not be very pleased to learn that large country piles, and perhaps a few urban manors also, will not have to pay the tax on the value of so-called “amenity land” in excess of one acre.
Take the home on Shrewsbury Road in Dublin which was associated with the Dunnes, Sean and Gayle. “Walford” was bought for €58m at the height of the boom and was placed on the market with a guide price of €15m in 2011. It is understood that it still hasn’t sold. How much is it worth for property tax purposes? Difficult to say, but the property does have 1.5 acres of grounds. What we do know is the property tax will only apply to the first acre. As for the other 0.5 acre, that won’t be taxed at all.
Now take the country manor of embattled health minister James Reilly and his wife, Dot. Loughton House – pictured here – in Offaly is said to have 150 acres of amenity land, mostly woodland and gardens. How much will the man who has recently graced Stubbs Gazette have to pay in tax on the 13-bedroom mansion and surrounding land? Difficult to say, but what we do know, is that he will only have to value the sprawling estate as if it had one measly acre of amenity land.
In the Dail this week, the Minister for Finance Michael Noonan responded to questions from the Independent Kerry TD, Michael Healy-Rae and the Sinn Fein finance spokesperson Pearse Doherty. Minister Noonan did confirm that tennis courts are regarded as structures that need to be valued, and presumably outside swimming pools will be similarly treated. But if your home has private lakes, lawns, gardens, woodland only the first acre will be taken into account for valuing your property for the property tax.
Fair?
The full parliamentary questions and response are here.
Deputy Michael Healy-Rae: To ask the Minister for Finance the reason persons are now being told that private homes will now have to take into account the amount of grounds around them when valuing them for the profile of property tax; and if he will make a statement on the matter.
Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm that only the first acre of amenity land appurtenant to residential property, for example, private lakes, gardens, unproductive woodland and private tennis courts with an overall total area of in excess of one acre, will be subject to the new property tax to take effect from 1 July 2013 and that any excess over one acre will be disregarded for the purposes of calculating the value of the residential property for the purposes of levying the new property tax.
Minister for Finance, Michael Noonan: I propose to take Questions Nos. 202 and 218 together. They both relate to the curtilage of a residential property and how this is to be taken into account for the purposes of valuing the property for Local Property Tax purposes.
A residential property is defined in the Local Property Tax legislation to include not just the dwelling house itself but also any other buildings or structures and any land that, in a broad sense, belongs with the dwelling house and that are enjoyed as an amenity rather than used for a commercial purpose. These are regarded as an intrinsic part of the dwelling house. Such buildings or structures would include, for example, garages, sheds, outhouses, greenhouses and tennis courts. Land would include driveways, yards, gardens, woodland and lakes. Thus, in the case of a farmhouse, any land used for farming purposes will not be included in the chargeable value of the farmhouse.
There is no limit placed on the extent of the area that is occupied by buildings and structures, regardless of their distance from the dwelling house. However, the extent of any land that is to be included in the chargeable value of the residential property is limited to one acre.
UPDATE: 28th January, 2013. Another person who will be relieved to hear that amenity land will be restricted to one acre for valuations for the purpose of assessing the new property tax, will be scion of the country’s premier beef baron, Laurence Goodman junior. Laurence is son to 76-year old Larry Goodman and is reported by the Sunday Times to have obtained planning permission to extend his property at Castlebellingham in county Louth. The present property was bought for €355,000 but there are plans for a massive extension for garage, accommodation and machinery storage. There are eight acres of amenity land which will be planted with trees, and there will even be a new footbridge over a river to connect with the adjoining 700-acre estate of his father at Braganstown House.
@ NWL This is a standard Revenue definition of a Principal Private residence and would for example apply to Capital Gains Tax.
If a person sold a house with say ten acres of gardens, the PPR exemption would apply to just the house and one acre of the gardens with the balance being liable to CGT.
This is nothing new, see page 15 of the Revenue’s CGT guide http://www.revenue.ie/en/tax/cgt/leaflets/cgt1.pdf
@Niall, this was billed as a dependable recurring tax which wouldn’t be affected by transactions or income. If that is really the case, then the entire property inclusive of all of its amenity land – and there should only be a few hundred properties in the State that this applies to, I suppose Lissadell which is in the Supreme Court over rights of way at present would be another example – will be taxed. Waiting for trusts to dance around inheritance etc is just a perversion when this tax is going to hit the most modest of properties in the State.
As said before, it’s a building/residence tax, not a woodland/garden tax so the exclusion makes sense. After all if you just own the woodland/garden but no house, there’s no tax.
This property tax is now a bad joke. It is clear that it is not a traditional “wealth tax” in any way shape or form. In every facet and form it is an extra income tax on PAYE workers. Nothing more.
We should have just raised the income tax rates altogether.