Pearse Doherty (Donegal South West, Sinn Fein) | Oireachtas source

I move amendment No. 4:

In page 10, line 12, to delete “sale;” and substitute the following:

“sale, net of the following:(a) any outstanding liabilities on the mortgage of the relevant residential property,

(b) the total value of stamp duty paid following the purchase of the relevant residential property where it was bought on or after 2000,

(c) the value accruing to the relevant residential property arising from any adaptations to the property for the purposes of making it suitable for a person with a physical, sensory or intellectual disability or mental health difficulty to live in,and where the relevant residential property is in negative equity, the chargeable value shall be the current market value of the relevant property on the valuation date less the value of the property at the time of purchase as expressed in the full value of the mortgage taken out at the time of purchase;”.

This amendment deals with some of the issues Members discussed in section 1 of the Bill. It goes to the crux of some of the Bill's most appalling aspects, as well as areas for which the Government has not legislated with regard to how a property is valued. Amendment No. 4 would deal with the section that defines the chargeable value and instead of stating the chargeable value is the gross market value of the house at the time of sale, it proposes it would be net of the following provisions. At the outset, I must state this amendment was submitted to the Bills Office as four separate individual amendments but without my consent, they have been rolled into a single amendment. I had intended to propose these provisions individually, as the Minister may accept one but perhaps not the others. Nevertheless, this is the manner in which the amendment has appeared on the amendment list. The amendment reads that the value would be the value at sale, "net of the following", which would be:

(a) any outstanding liabilities on the mortgage of the relevant residential property,

(b) the total value of stamp duty paid following the purchase of the relevant residential property where it was bought on or after 2000,

(c) the value accruing to the relevant residential property arising from any adaptations to the property for the purposes of making it suitable for a person with a physical, sensory or intellectual disability or mental health difficulty to live in.

The fourth point is "where the relevant residential property is in negative equity, the chargeable value shall be the current market value of the relevant property on the valuation date less the value of the property at the time of purchase as expressed in the full value of the mortgage taken out at the time of purchase".

This amendment proposes to add a new paragraph to section 2 of the Bill under the definitions of "chargeable value". In plain English, the Bill as it stands defines what is taxable as being the gross market value of the family home and this is the value the Government intends to apply to the family home tax. This definition contains one of the most unfair elements in the entire Bill and by basing the tax on the gross market value, the Government is refusing to take in a range of other issues that are central to the true valuation of the home. The Government does not take into account an outstanding mortgage or the issues of negative equity, that is, taxes on a debt instead of on an asset. While Members tried to debate this point earlier, the Minister fails to comprehend the idea that someone in a house valued at €50,000 or €60,000 might have a liability of €250,000 for that same property. In essence, the Minister proposes to tax a debt or a liability. The legislation does not take into account the huge amount of stamp duty paid by people who bought their homes at the height of the boom in particular. Moreover, the Minister does not take into account the adaptations made for a set of people who were obliged to adapt their houses to make them suitable for people with physical, sensory or intellectual disabilities or mental health difficulties.

My definition proposes to amend "chargeable value" to take into account these areas. It takes in the net value of the home and, consequently, it excludes the mortgage liability. As property prices have fallen by approximately 55%, a person in a property valued at €100,000 but with a mortgage of €200,000 does not have an asset. That person has a liability and until that liability is discharged to the bank, the bank has a call on that home. Unless this amendment is accepted, the Government basically will tax debts and liabilities for that group of people who have mortgages on such properties in excess of the market value of that property. The issue of negative equity also is dealt with through the last part of the amendment, in which the chargeable value would be the value of the house net of the mortgage, that is, the market value at the time the mortgage was taken out. In addition, those who have paid stamp duties also already have contributed in the form of property tax, as Deputy Gilmore called it before the last election. They have paid their property tax in the form of stamp duty and these people should not be punished again, particularly those who paid thousands of euro in stamp duty after 2000. I recall that during the 2007 election campaign, when the property bubble had run its course and was about to crash, the Minister for Finance and his party, the Labour Party and Fianna Fáil all scrambled to try to throw more fuel into the fire by getting involved in the auction politics of trying to reduce stamp duty in order that people would continue to buy houses at the height of the boom. I note that some of the issues and concerns with which Members are dealing in this legislation are as a result of that involvement. A friend of mine moved to Dublin and bought a two-bedroom apartment in the hope that at a later stage, he would be able to start a family, have children and so on.

They bought an apartment just to get on the property ladder, paying €450,000 for it. That couple cannot pay their mortgage and the two-bedroom apartment they live in is worth a fraction of the purchase price. Despite their not being able to pay their mortgage, it is planned to land another tax on them.

There is also a group of individuals who have had to adapt their houses. An individual living on an island off the coast of Donegal had the misfortune of having a family member in a serious accident. As the person wanted this family member at home, there was a need to expand the house and add a self-contained bedroom, changing room, etc. This has increased the market value of the house, although it came from a requirement to deal with the physical needs of a person. There are many cases like this where people have had to adapt a house to deal with such issues through no fault of their own, even if they did not wish to do so. As a result, the market value of such houses has been increased.

These constitute some of the most unfair elements in this legislation. The Minister knows I am completely opposed to the legislation and do not want to see it going through the House but I indicated on Second Stage that I would bring forward sensible amendments that would deal with some of the worst aspects of the Bill. The Minister has dismissed my comments and those of other Deputies but we will take that with a pinch of salt as he heaped praise on a party colleague who did not read the Bill. The Deputy in question called on the Minister to bring forward an easy payment mechanism despite it being contained in the Bill already. If the Deputy had read the Bill, he would have known about it.

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