We were speaking to Jonathan Healy who was covering for George Hook on ‘The Right Hook’ about the ‘home renovation initiative’ which is set to end at the end of 2016. We covered some of the general terms and conditions of how it worked then went on to analyse whether it was a good idea or not given the various happenings everywhere else in the market.
VAT cuts in construction, who would get the benefit and why?
VAT is an end user tax, the ‘cost’ to businesses is zero. That fact is often overlooked in all debates about VAT, a business has input and output VAT, if they take in more than they charge they send the balance to Revenue, if they pay out more than they take in they are in a refund situation.
So why would dropping the VAT rate make any difference at all if the cost to the business doesn’t change as a result of it?
The normal implication is that the end user would benefit because you would have a ‘cost plus’ that would result in a lower end price, which intuitively makes sense until you consider the other issue of bottom up costs and obvious capacity for additional profit taking.
What that means is there are bottom up costs like various levies, regulations, and carry costs that make the break even point higher than it might naturally be, certainly higher than it ought to be if you go by international standards. If current costs are above break even a lower VAT …
RTE Talking Money – AirBnB (making a house pay), 17th August 2015
With Revenue set to receive the names of over 9,000 AirBnB ‘hosts’ we looked at the implications of this as well as other ways to make your house pay for itself. The obvious one is the tax free €12,000 ‘rent a room’ scheme, but it doesn’t stop there! Find out more as Karl Deeter and Jill Kerby ‘Talk Money’.
Should we consider scrapping any gains tax on sites temporarily?
If we are to look at housing (at least in Dublin) as being of a crisis nature then perhaps we should consider some bold moves that might bring land into play that otherwise wouldn’t make it.
The talk of a site tax is a good idea, it was the tax we were meant to get from the beginning before the government reneged on their stance for it. This will help create a ‘use it or lose it’ aspect to land holding. The second trick is to encourage movement.
Scrapping the 80% windfall tax would be a start, but most of the site with planning don’t fall into that category, so perhaps scrapping Capital Gains Tax on any site sold (with planning) in 2014 would be a start. The reason for this, and the issue it intends to resolve, is that many sites have insolvent owners, or people too highly leveraged to make the site viable.
Getting rid of the 33% tax (which is harsher than it used to be because the tax …
The nonsense of VAT reclaims for ending the black market
One of the property concessions in budget 2014 was the ‘home renovation incentive scheme’. This is intended to allow people to get the VAT back on construction work done where the spend is over €5,000 and below €30,000.
While this is viewed as a ‘construction stimulus’ it is in fact a ‘black market disrupter’ which will run from the 1st of January 2014 to the 31st of December 2015. The reclaim will be valued at between €675 and €4,050 and will be given in the two years following the year the work is done, you also must be LPT compliant in order to avail of it.
So think it through, you will pay a certain amount of VAT on top of a job (or more appropriately the builder will charge you that) and over the two years after it you get it back in two tranches.
We have to make a few assumptions here, the first is that the cost of VAT on top of work is a deterrent from purchasing a service like construction, as VAT is an end …
The Last Word with Matt Cooper – talking property tax
On the 7th we were asked to speak with Matt Cooper about the local property tax figures which showed that 25% of properties in Ireland are worth less (at least on a tax submissions basis) than €100,000.
Taxing sites: Isn’t that what a site value tax would have done?
When I heard that Dublin City Council was considering a tax on undeveloped sites I nearly choked on my coffee. The introduction of the Local Property Tax was contentious, for many it was contentious not because we were being taxed but because of ‘how’ we were being taxed.
That’s because a sizeable group of people believed that a site value tax would be a better alternative. Our government promised this on page 15 of their programme for government where they stated that they would ‘consider, arising from the previous Government’s deal with the IMF, various options for a site valuation tax‘.
That the Local Property Tax isn’t even going to local authorities this year is a serious snub, but to then turn around and in the same year see a Council look for a separate and additional tax on sites only demonstrates that we are …
Property tax paying bondholders?
This was something that broke while I was on annual leave, it’s really infuriating to see that the property tax which was meant to be a fresh start for local authorities funding is (for 2013) not going to be given to them.
While a politician will always find a way to wiggle out of being called a liar, it’s pedantic to the extreme to think that the public would have realised that it was only going to local government from 2014 and not from the outset. If that was common knowledge it wouldn’t have made a headline so recently.
Given that this is bad outcome it does have to be balanced, and saying that the money is ‘going to bondholders’ is populist nonsense. If it is in the general expenditure coffer then it could go anywhere, you could equally spin the story that it’s going towards cancer wards in hospitals, that it is going towards supporting the homeless or anything else.
The tragedy here is that on the …
Property tax exemptions – 2013 Finance Bill ammendment
The list of exempted properties is in the new property tax amendment to the 2013 Finance Bill. Charities, properties held in trust, and those occupied by incapacitated people (within the meaning of section 189A(1) of the Act of 1997).
Of interest is section 7 which covers social housing. While access to social housing at the time of admission is normally due to diminished means of housing affordability, the upkeep, location and cost to local authorities is much higher than it would be for an equivalent private house. And a person in a social house is not removed should they become wealthier (their rent does increase).
Defaulting everybody in social housing into the lowest band places the same tax burden on people who may be at very different points in their career (and earnings capacity), it also doesn’t distinguish allowing for different groups within the social housing spectrum – there is a large difference in affordability between a younger single mother and an older couple with grown …
TV3 The Morning Show, with Sybil & Martin, ‘Property Watch’
We were on TV3 again talking to Sybil & Martin about the Irish property market, the cancellation of TRS for people who aren’t paying their mortgage and of course about property tax! Angela Keegan from MyHome was there, they have a nifty property tax calculator (here) and we also mentioned how Revenue have the power to ‘attach’ which is something many people don’t know about.