Revenue won’t ‘over-rely’ on recent house prices in LPT valuation guidance

The Revenue Commissioners will take recent price fluctuations in the "very constrained" housing market into account when advising homeowners "as best we can" how to value their properties for the local property tax (LPT), an Oireachtas committee heard on Tuesday.

The Revenue plans to revise its online guide before homeowners are asked to submit a new valuation this November, in what will be the first revision to valuations since the LPT was introduced in 2013.

However, speaking at the Joint Oireachtas Committee on Housing, Local Government and Heritage, Richard O'Donoghue, Independent TD for Limerick County, said it was impossible for homeowners to "get a proper valuation" at the moment amid sharp inflation in some selling prices.

“Houses that would have had a value of €200,000-€250,000 last year are now going for €400,000 this year, and there are people fighting over them,” said Mr O’Donoghue, citing supply constraints, the Covid-19 pandemic and the soaring price of building materials.

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In response, Keith Walsh, from the statistics and economics branch at the Revenue Commissioners, said the Revenue’s valuation guidance for the self-assessed tax would consider average prices for particular areas.

“What we won’t be doing is over-relying or relying too heavily on the recent values,” he said.

“In normal times, I think it is fair to say that the value of the properties that are being bought and sold on the market are probably a reasonable indicator of the overall stock of properties in the country. But when you have quite exceptional market conditions, as we have over the last few months, the properties that are selling are probably less of an indicator of what the actual underlying value is.”

Planned exemptions

Sinn Féin TD for Dublin Bay North, Denise Mitchell, welcomed the temporary LPT exemption announced last month – as part of the Department of Finance's overall reform of the tax – for homeowners whose homes have been damaged by defective pyrite and mica blocks in Donegal and Mayo.

Ms Mitchell asked a representative of the Department of Finance if apartment blocks with fire safety issues and other structural problems might also be exempted.

“Our starting point is always that the number of exemptions would be kept as limited as possible to make it fair for those who are paying the tax. The more people who are exempt means that the people who are paying have to pay more,” said Anne Marie Walshe from the department’s tax division.

“That is the starting point for considering any additional exemptions. There is no case being made at the moment for further exemptions.”

More than 100,000 that were eligible from previous exemptions from LPT are expected to be subject to the tax from November.

Minister for Finance Paschal Donohoe will on Wednesday attend a hearing of the Oireachtas finance committee, which is engaged in pre-legislative scrutiny of the general scheme of the Finance (Local Property Tax) Amendment Bill 2021.

The Department of Finance recently indicated that 36 per cent of homeowners would pay a higher tax than they do at present, some 53 per cent won’t see any change, while 11 per cent will see their LPT liability fall.