Q&A: Personal Finance - Dominic Coyle
Mixed up on valuations for local property tax
The letter about the local property tax arrived last week. It says I should pay €607.50 this year. When I looked at Revenue’s own website, it gave me a figure of €697.50. Another website I looked at gave a different figure. I’m really confused and slightly worried because everyone keeps telling me I can be blamed and fined if I get the figure wrong.
Our house is in a good area but is quite old . As we have been here for years, we have got comfortable with it but, to outside eyes, it probably looks as if it could do with some money being put into it .
How am I supposed to get this right? We’re both pensioners so money is tight enough. I don’t want to pay more than I need to, but I also don’t want any hassle with the tax.
Mrs B McD, Dublin
Self-employed business people may be familiar with self-assessment but, for the rest of us, it is a very unfamiliar, and vaguely uncomfortable, position to find ourselves. Be that as it may, self-assessment is a reality with the arrival of the local property tax.
It clearly doesn’t help that the band Revenue suggests you should be in differs from what its own local property tax guide website indicates, but neither figure should be seen as absolute – nor those from any other website. The figure is based on an “average” for the area, as far as I can see. Naturally, within any area, there will be wide differences in house types and condition, and even substantial valuation gaps between one road and another.
My suggestion is that you set the letter aside for a minute and do your own assessment. Of course, the most straightforward way to do this is to get a professional valuation but that in itself costs money and, in any case, should not be necessary.
Have any homes similar to yours been sold in the past year or so, or are any on the market? That would give you a benchmark. You can try the residential property price register (propertypriceregister.ie) for details.
Be honest with yourself. Is the house a little tatty? That will clearly affect market value. On the flip side, have you added features over the years – a conservatory maybe – that would increase the value compared to other similar homes.
If there has not been much recent activity, you might have to resort to assessments of property prices, not least the Central Statistics Office ’s own residential property price index to gauge the fall in value from peak or the rise/fall since you bought. In general, Dublin prices are down by more than 50 per cent from peak, some closer to two-thirds.
Of course, the worry is that a figure differing from Revenue’s guesstimate could leave you open to a subsequent Revenue challenge or fine, as you state. However, as long as you can support your estimate with details of how you came to your figure, you should not worry.
Living in fear of a Cyprus -style savings raid
You keep talking about money in bank savings being safe, but what are we to think now after the levy on savings in Cyprus? If they can do that there, in an EU country, what is to stop them doing it here? What can I do to make sure my money is safe? Would it be better to move it out of euros, say into sterling?
Mr P.W., Galway
Across the euro zone, there is a deposit guarantee scheme, which effectively ensures that people with up to a maximum of €100,000 in savings in any given bank will not lose out if that bank collapses. If you have less than €100,000 in each of two banks – say a total of €180,000 split between, say, AIB and Bank of Ireland – it should be safe.
This guarantee was in place even when we had the blanket guarantee on bank deposits following the financial crisis, Now that the absolute guarantee is going, the €100,000 protection scheme remains in place.
What’s been going on in Cyprus has been truly alarming for small savers cross the Eu ropean Union. It’s very unclear how the decision was taken to hit people with less than €100,000, with the EU blaming local Cypriot politicians trying to assuage larger Russian investors and the Cypriots blaming the EU, especially Germany.
I saw eurogroup chief Jeroen Dijsselbloem try to explain that the “one-off” tax was just a levy and not an undermining of the deposit guarantee scheme, but what is clear from his comments is a general view that depositors should share some of the pain.
I do think your money is safe in your Irish account, not least because of the furore over the Cypriot move. However, the bottom line is that next time a country in the EU is facing a financial crunch, people will move to withdraw their money from banks so that it is not targeted in any bailout, leading inevitably to a run on the banks and an exacerbation of the difficulties. Crazy.
This column is a reader service and is not intended to replace professional advice. Please send your questions to Q&A, c/o Dominic Coyle, The Irish Times, 24-28 Tara Street, Dublin2, or to firstname.lastname@example.org. No personal correspondence will be entered into