RTE 6 O’Clock News – 11th November 2010, Debt forgiveness from Irish Mortgage Brokers on Vimeo.
Both the 6 and the 9 news followed up on the story of debt forgiveness, it was tied into the other story of the day about property tax.
Are investment property owners ‘hard pressed’?
PTsb are going to take away investors tracker mortgages unless they go to capital and interest payments, that story was broken by Charlie Weston in the Independent today. That is a business decision by them, but for the business affected (landlords) it creates a new problem.
How can they do this? Isn’t it part of the new rules that banks can’t take your tracker from you? Yes and no, if you bought a property as an investment you are not covered by the Consumer Credit Act 1995 (you are not acting as a consumer) or the Code of Conduct for Mortgage Arrears. So any renegotiation can result in the loss of a tracker, staying on interest only (if you are with Ptsb – and others will follow suit) will require moving to a variable rate.
We’ll look at a standard example: Take Joe, he is married and earns €45,000 p.a. and his wife Kate makes €30,000 they bought an investment property with their SSIA’s (€30k deposit on a property for €300,000 in 2006). …
The importance of Land or Site Value Taxation, Fred Harrison, Karl Deeter and Stephen Reed
Land Value Tax (part1)- Fred Harrison, Karl Deeter and Stephen Reed from Irish Mortgage Brokers on Vimeo.
This is a talk that was given at the School of Philosophy and Economic Science on Wednesday the 27th of October 2010. It covers the reasons for Land or Site Value Taxation being an important aspect of any normal and functioning economy, Fred Harrison gives the economic background, Karl Deeter discusses some of the general societal issues and Stephen Reed relates to his practical experience as a Mayor who used it to regenerate his City.
Site Value Tax: What is it? How does it work?
I volunteer with a group called Smart Taxes who are a sustainable taxation think tank. This has post is taken from their site (original in link above), and it is well worth reading if you want to hear about the reasoning behind using site value or land value taxation as opposed to ‘property taxation’.
Site Value Tax is a taxation reform included in the Irish government’s current Program for Government. It levies an annual charge on the value of all developed and undeveloped zoned land including the site under every building in residential use. It does not include un-zoned land i.e. agricultural land, forestry and peat-lands. It does not include developed commercial property currently subject to local rates but it is expected that SVT will replace commercial rates in due course. It does however, include land zoned for commercial uses not currently subject to rates. Research by Smart Taxes and other groups has shown that SVT has clear benefits over other kinds of property taxes from a number of perspectives; macro and micro-economic, environmental and social. …
Property Tax is a good thing, but only one type of it.
We had an opinion piece in the Sunday Times this week in the ‘Money’ section, it was about property tax and the different types that the state have to choose from, property tax could be a very beneficial option for Ireland but only if it is implemented correctly and done on the correct basis, otherwise it just becomes straightforward ‘revenue raising’.
You can read the article by clicking on the image to the left, which is the .pdf version of the text below:
Everybody hates the idea of a property tax—except me. I believe it is the solution to much of what went wrong in Ireland and it could have prevented many of our present and future economic ills. The only caveat is that we must have a corresponding reduction in income taxes. Otherwise it would merely be another form of revenue raising by the government.
There are three options the state could choose from—a property tax, which includes …
Are 100% mortgages the problem? Is LTV a symptom or a cause?
An article in the Independent yesterday pointed toward 100% mortgages being a significant attributer to the bubble, I would wager it was a symptom rather than a cause, the IBA meanwhile has called for all mortgages to be made on a non-recourse basis.
The good thing is that people and organisations are trying to find a way to avoid a repeat of the property bubble, and they are not one off events as the UK can testify. There are however, significant factors contributing to what happened.
1: lenders didn’t price risk, they didn’t even ‘price at all’: Banks have utterly failed to do the job they were designed to do, namely that of profitable intermediation, we had huge amounts of competition on lending, that drove down criteria requirements and also compressed margins, then along came trackers, these had low margin price promises – Bank of Scotland brought them into Ireland and have since left. I spoke with a Bank exec. yesterday and he …
Fred Harrison talks about the property tax
I called Fred Harrison in connection with a book review I had done for the national broker associations magazine ‘The Professional Insurance Broker’, I wanted to send him on a copy, what was meant to be a quick hello/goodbye turned into a fascinating chat on the topic of property taxes.
Something that we are seeing more of lately is a debate where the public sector are demonized – often for merely existing – and portrayed as being ‘wasteful’ and bloated. Bob Frank in the US said something to me before that stuck in my head, that ‘the serious waste occurs in the private sector, the public sector don’t go around buying hummers and other pointless trophies, the ‘waste’ in the public sector however, is found in the way that they budget and perform versus the private sector’.
I think that is profound, the public sector don’t waste in the same manner and it is important to remember that in any …
Vlog on the Irish Economy – Ronan Lyons & Karl Deeter
I met up with Ronan Lyons (economist with Daft.ie) to talk about the ideas of property tax in Ireland, how it might be a fairer way to tax people than stamp duty, or indeed the abscence of property tax [because it rewards/doesn’t tax holding certain assets]. The discussion spread to other ideas in taxation, and eventually we made some predictions (I can already say they are bound to be wrong!) and then we took to the streets and asked Joe Public about their thoughts on the economy and whether or not they had any hope for the future.
If you want to watch the full conversation you can check out the playlist on youtube.
Ronan writes a very interesting blog, you can check it out at http://www.ronanlyons.com what I personally like best about Ronan (other than his affable good nature) is the unique take he has on many topics on Irish Propert (a subject I am very fond of), by utilising the daft database he is …
Property Tax 2009: non-principal private residencies €200
The Local Government Act 2009 introduced a €200 annual charge for owners on non-principal private residences
The charge applies mainly to owners of private rental property and holiday homes. It also applies to vacant residential property unless newly built but unsold (handy if you are a developer, lousy if you are the owner of a newly un-lettable gaff). Liability to pay the charge is assessed by the owners themselves. Ownership of a non-principal private residence on the ‘liability date’ (31st July 2009) determines liability to pay the €200 charge.
Payment is due by 30th September 2009. A €20 per month late payment fee will apply from 1st November in respect of each month for which payment is overdue. This bit is interesting – because normally surcharges and penalties for any unpaid tax are much much lower, this amounts to an ongoing 10% fine for every month – while €20 may not seem excessive, it is certainly (when viewed in percentage terms) extreme. Especially given that there is not much being published …
How is TRS calculated?
TRS or Tax Relief at Source, is a mortgage related tax relief available to first time buyers. The working elements of it will be described in today’s post.
When you draw down a mortgage, if you are a qualifying applicant, then you can then apply for your TRS by downloading the TRS1p form from the Revenue website. After you send it off it will take a few weeks to process, and then you will get the years tax relief averaged out over the remainder of the year.
For example (we’ll show the calculations later) if your mortgage drew down in January but your TRS only kicked in during March then the relief would be paid as the average of 12 months over 9 months – say it was meant to be €300 per month (had it started in January) then you’d be getting €400 per month for the remainder of the partial year.
The …