Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I will deal first with Deputy Daly's amendment and then Deputy Michael McGrath's amendment, taking into account the contributions of other Deputies.

I am aware of the issues that Deputy Daly is attempting to address with her amendment. Officials of my Department, along with officials of the Department of the Environment, Community and Local Government, have been examining the alternative other than testing that will be available in order to confirm entitlement to local property tax exemption, with a view to coming up with an early viable solution for all.

The Deputy's amendment removes the requirement for sub-floor hard core testing and replaces it with either acceptance by the Pyrite Remediation Board for remediation or location in any area where the presence of pyrite has been established. As I am sure the Deputy is aware, the Pyrite Remediation Board's pyrite resolution scheme is limited to properties with a damage condition rating of two and this requirement would therefore be of no use to a property with a damage condition rating of one with progression. As the Pyrite Remediation Board's pyrite resolution scheme is a scheme of last resort, it would also be of no use to properties being remediated through other avenues, for example, through insurance or directly by builders. It is important that any changes that may be made to the LPT legislation do not go beyond the objectives of providing a temporary exemption for homes with significant pyritic damage. As I have advised on many occasions in the past, a liability to LPT should apply to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. The other option proposed by the Deputy, that is, location in any area where the presence of pyrite has been established, does not in itself establish the presence of pyrite in any particular property. In this regard, I believe the Deputy's proposal is too broad and could result in the relief being available to those beyond the intended target group.

The local property tax operates on a self-assessment basis and it is a matter for the property owner in the first instance to calculate the tax due, based on his or her assessment of the market value of the property. Where a property owner does not qualify for an exemption, when making an assessment, issues such as the presence of pyrite in a particular area would be one of the factors that he or she could take into account in valuing the property. For the reasons outlined above, I am not accepting the Deputy's amendment although I hope the issues she has raised can be resolved outside the Bill. I can confirm that while I am not accepting the amendment, officials are and will continue to examine how the issue - which is problematic - can be dealt with. We will continue in discussion with the Department of the Environment, Community and Local Government to see if we can arrive at an appropriate solution.

Deputy McGrath's amendment deals with the local property tax deduction for landlords. Chapter 4 of Part 8 of the Taxes Consolidation Act 1997 provides for the charging to tax under Case V of Schedule D of income arising on rent from property in the State. The income chargeable under Case V in respect of such property is computed by making the deductions for expenditure authorised by section 97(2) of the Taxes Consolidation Act from the gross rent. These deductions include, for example, expenditure on rates, maintenance, repairs and interest on a loan used to purchase, improve or repair the rental property. Amendment No. 50 seeks to add to these allowable deductions by proposing a new deduction for local property tax paid in respect of rental property.

Deputies will be aware that as part of the process leading to the introduction of local property tax, an interdepartmental group on property tax was tasked with the design of the tax. In its report to the Minister for the Environment, Community and Local Government, generally referred to as the Thornhill report, the group suggested that there seemed to be an argument for allowing at least a portion of LPT paid in respect of a rented property to be deductible for tax purposes in the same way as commercial rates are so deductible. However, having regard to the pressures on the public finances and the need to bridge the gap between expenditure and revenue, the report also suggested that consideration be given to phasing in deductibility, having regard to the prevailing budgetary situation, over a period of years. This approach was accepted in principle by the Government.

As I stated in my budget 2015 speech, both the taxation and expenditure sides of this year's budget are designed to support and broaden the economic recovery that the country is now experiencing. As such, available resources have been carefully targeted at initiatives that will build consumer confidence, support jobs and strengthen demand in the domestic economy. In this context, I consider that now is not an opportune time to introduce a deduction for local property tax paid in respect of rental property.

Amendment No. 52 requires me to issue a report, within six months of the enactment of this Act, detailing how and when I will introduce a deduction for local property tax paid for the purposes of computing taxable rental income. I consider that the question of if, or when, such a deduction is to be introduced and the extent of any such deduction is best considered as part of the budgetary and finance Bill process rather than by issuing a report on the matter in the manner suggested by the Deputy. For all of these reasons, I am not accepting these amendments.

Deputy McGrath's amendment No. 51 wishes to give broad discretion to the Minister as to when properties should be revalued for LPT purposes. As the local property tax is a new tax, the Government wished to provide certainty to home owners and for this reason valuation periods of three years were introduced, with the exception of the first valuation period which covers three and a half years. In addition to providing certainty, it also eases the administration burden on home owners by not having to revalue their houses each year.

The Deputy may be aware that under the LPT legislation, where a property is not a relevant residential property on a valuation date, that is, not liable to LPT, with certain exceptions, that property will not be a relevant residential property until the next valuation date. In the interests of equity to those who are compliant payers of the local property tax, it is important to have regular valuation dates so that newly built properties are brought into the LPT net. It also provides certainty to those home owners as to when they will become liable for LPT.

In the absence of further valuation dates, new properties built after 1 May 2013 would not be liable to LPT and would not have a valuation for LPT purposes. Should those properties be brought into the scope of LPT using a different valuation date, it would be inequitable to those home owners as their LPT liabilities would be assessed using a later valuation date, where property prices are increasing, compared to those currently on the register.

While I am very conscious of the concerns of home owners over increasing property prices and the effects this will have on their LPT liabilities, particularly in urban areas, I do not believe the Deputy's amendment is the most appropriate way to address these concerns. The next valuation date is not until 1 November 2016. In advance of that date, in conjunction with my officials, I will be examining the LPT and any impacts on LPT liabilities due to increasing property prices. However, any consideration at this stage would be premature. For the reasons outlined, I am not minded to accept the Deputy's amendment.

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