The Minister for Finance, Michael Noonan has presented the budget this week. Headline in the Irish Times read "Sixth austerity budget to hit almost every adult in the state."
"The new local property tax will certainly hit landlords as far as I can see. It will commence with effect from 1st July 2013, for the second half of the year.
It will be collected by the Revenue Commissioners.
Owners of residential properties including rental properties, will be responsible for the payment of the tax" according to Mr Noonan's statement.
It looks like the property owner will pay per year an amount based on the value of the home. It will be interestiting to know how properties will be value in the leadup to the introduction of this tax.
The owner of a property valued up to €100,000 will have to pay €90 per year, up to €250,000 - €405 per year, up to €400,000 will have to pay €675 per year, up to €650,000 will have to pay €1,125 per year and €1.1million will have to pay €2,050 per year.
Mr Noonan went on to say that "The household charge will cease with effect from January 1st 2013 and NPR (Non principle residence) charge or second home charge will cease with effect from January 1st 2014." Full details will be published this week by the Government.
At present the owner / landlord of a rental property pays the €100 household charge plus the €200 NPR charge. Landlords do not appear to get tax relief on these property taxes which they have to pay and not their tenants.So does it mean the same rules will apply.
This is really not good news for landlords in Ireland.
In England for example a tenant is responsible for paying the property tax called Council Tax. In the event of a landlord paying this then the landlord will be able to offest this against rental income on the profit and loss for the rental.
It looks like a couple renting a house will be slightly better off than one buying one, however if the landlord is going to have to pay the property tax without any tax relief then surely when there is a rent review or the property out on the rental market, the actual rent will have to higher to cover the landlord's additional costs.