Tax crackdown on home sellers13/02/2013 - 19:35:05
Previous reports that the buyer of an undervalued property is liable to pay a €500 fine, have been clarified.
The actual situation is that people selling their home face fines of €500 for failing to provide the buyer with proof of their property valuation, under new property tax laws.
A clause in the legislation also requires the new homeowner to report to Revenue if the previous owner undervalued the property putting it in a lower tax band.
And the buyer will be responsible for ensuring an incorrect valuation is put right in time for the next tax bill.
A Department of Finance spokesman said this was to deter people from undervaluing their homes to avoid tax.
“As part of the sales process, a seller must supply the purchaser with information on the value that they have put on the house for property tax purposes,” a Department of Finance spokesman said.
“If the vendor does not supply this information, they could be liable for €500.”
Revenue officials will also go after the seller for unpaid tax if a house they once owned is found to have been undervalued.
“Any shortfall in Local Property Tax before the property is sold is entirely between the Revenue and the seller and has no impact on the purchaser,” a department spokesman said.
The new legislation demands that a person selling their home in the period between two valuation dates must inform the buyer the value at which they declared the property to Revenue on the first date.
The buyer is then required to tell tax chiefs if the last value was too low and submit their own higher valuation.
Revenue would then chase down the seller for the underpaid property tax sum based on his or her previous under-valuation.
Other measures in the legislation for the new tax – which is to come into force in July – will see local authority and voluntary housing association homes included in the lowest tax band – worth up to the value of €100,000.
This means that neighbours living in identical houses of the same value could face drastically different tax charges – with the resident of a local authority property paying the lowest band, and a person who owns their home placed within a higher bracket.
Sinn Fein’s Mr Doherty argued local authority tenants should be forced to pay no tax at all.
He said people will have a “very bad taste in their mouth” when the letters from Revenue demanding the payments finally arrive.
Sinn Fein has drafted legislation to repeal the property tax, which will go before the Oireachtas within the coming weeks.
The new value-based property tax – first announced in December’s budget – will see homeowners pay 0.18% of the value of their home.
That charge rises to 0.25% on properties worth more than €1,000,000.
Some people will be exempt from paying the tax – including those in homes affected by pyrite and people with permanent disabilities.
Elsewhere, the Government published the Finance Bill 2013 – which sets into law measures outlined in the budget.
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