AS MANY as 200,000 second homes, holiday homes and rental properties will be subject to a new €200 tax once enabling legislation is passed next month.
Minister for the Environment John Gormley yesterday published the Local Government Charges Bill 2009 which proposes to tax non-principal private residences. The taxes will not be collected by central government but by the local authority where the residence is based.
The measure was first announced in last October’s budget.
No accurate figures are available on the overall number of second homes, holiday homes and rented properties in Ireland.
However, Mr Gormley yesterday predicted that this new tax would raise a total of €40 million for county councils and city councils each year. On the basis of that figure, the Department of the Environment estimates that there are 200,000 such dwellings in Ireland; more than 10 per cent of the housing stock of over 1.8 million.
A tax will be levied for each dwelling which is not the principal residence. An owner who has three holiday homes or rental properties will, therefore, be liable to pay a tax of €600 per annum.
The Bill will be introduced in the Seanad on July 1st, and is expected to complete its passage through the Dáil and Seanad on July 8th.
Department sources said they expected local authorities to set up user-friendly website providing property owners with a choice of payment method.
Under the proposed law there will also be an onus on owners to declare second homes and rental properties. Second homes which are vacant are liable unless they are newly-constructed and unsold. Those who acquire a second property with the intention of making it the principal home will be exempt as long as they sell the original property within six months.
Mr Gormley said the legislation represented a “significant broadening of the revenue base of local authorities”. The economy had been overly-reliant on transaction taxes in the construction sector which had created an imbalance in the public finances, he noted.
Fine Gael criticised the measure, particularly its reliance on local authorities to raise the taxes. “The arrangement is cumbersome and not thought out,” local government spokesman Phil Hogan said. He added that he did not believe it could raise anything like the €40 million suggested.
However, Chambers Ireland welcomed the tax. Its chief executive, Ian Talbot, said it was the “first step on the process of introducing broad-based local tax as called for by us”.
Elsewhere, the Irish Property Owners Association described the tax as unfair, saying it was considering mounting a challenge to the legislation.
The Commission for Taxation, which is due to report at the end of July, is widely expected to recommend the introduction of some form of property tax on primary residences.