Feeling undervalued by the property price estimates? What next?
Many homeowners at the higher end of the market will have been pleasantly surprised by Revenue valuations issued this week for the property tax. But what should you do if you feel your house is worth more than the estimate?
Everyone knew there would be some hiccups when the new property tax switched from being a Cabinet discussion document to being a cold, hard reality, as it did for nearly two million house owners earlier this week. Almost as soon as the Revenue Commissioners put its price guide online on Sunday afternoon people were complaining, with many questioning the tax man’s property-valuation skills.
Two weeks ago, all the chatter was focused on what people would do if the value of their property was overestimated. That would have left them in a position where they could either challenge the Revenue Commissioners – and who wants to do that? – or pay more than their fair share.
As it happens, the biggest problem so far seems to be low-balling. The Revenue’s valuation system has relied on electoral areas and broad brushstrokes and does not take into account many factors, both tangible and intangible, which add value to a property. This means many houses which have recently sold for one price have been assigned to tax bands much further down the scale, and many thousands of people are now scratching their heads and wondering what they should do next.
The Revenue says my house is worth €150,000, but I know for sure it is worth €250,000. Should I keep schtum and pay at the lower rate?
This may be very tempting, but we are not convinced it is a good idea. Nor are the experts. “We have been inundated with calls over the past three days, with most callers expressing concern that their houses have been undervalued,” says the chief executive of Douglas Newman Good, Keith Lowe. “What we are telling people is that honesty is the best policy and people should pay what their house is worth.”
But why is Revenue telling me it is worth so little?
Simply because it is not in the business of valuing property. The good news is that neither is it in the business of setting traps for people. Its price guide is just that: a guide and not a definitive price. It has made it clear that it expects everyone who is liable for the tax to “honestly” assess the value of their property and pay the tax accordingly.
But how can I be expected to get it exactly right?
You can’t be. And don’t be worried if you don’t. Tax experts have indicated that they do not anticipate the Revenue will police the tax bands rigidly. If you say your house falls into the €150,000-€200,000 bracket and pay the tax at that level for three years before selling it for between €200,000 and €250,000, it is unlikely there will be repercussions. If, however, you live in a five-bed in Howth which the Revenue thinks is worth €550,000 and but is actually worth €850,000, they will most likely spot the anomaly at some point. “The tax bands are wide enough to provide a level of comfort, and individual valuations do not have to be precise,” Revenue says. “We want people to be reasonable and honest.”