Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important matter. I note his comments on the Central Bank's decisions on mortgages. The Central Bank is independent and it, not the Government, has decided on these regulations. The Government accepts them. During the consultation period, the Central Bank took on the concerns of many people, including first-time buyers. The deposit required does not jump from 10% to 20% but increases on a sliding scale. A house priced at €440,000 requires a deposit of approximately 15% and a house must be priced at approximately €1 million to require a deposit of 18%.

The introduction of the Local Property Tax, LPT, is part of a broader approach to the taxation of property, which aims to replace some of the revenues from transaction based taxes, which have proved to be an unstable source of Government revenue, with an annual recurring property tax, which international experience has shown to be a stable source of funding. The Government decided that a liability to the LPT should apply to all owners of residential properties with a limited number of exemptions. This is consistent with the report of the inter-departmental group on the design of a local property tax, chaired by Dr. Don Thornhill, which concluded that a universal liability should apply to all owners of residential property with a limited number of exemptions. Even with the limited number of exemptions available under the legislation, I am advised by the Revenue Commissioners that, based on the most recent data available, exemptions have been claimed in respect of some 36,000 properties for the 2014 LPT. Reliefs and exemptions have costs which must be paid for and their introduction must be considered only where there is a clear economic and social policy need to be addressed.

While there is no specific exemption from LPT for those over 65, they may be exempt or eligible for relief from LPT for another reason, or may be entitled to avail of a deferral arrangement under the provisions contained in the legislation. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. When people downsize their residential properties, assuming they stay in a similar location to the properties they are selling, their LPT liability will, most likely, be less than the amount they were liable for on their original property.

Capital gains tax, CGT, and stamp duties might also be regarded as property related taxes. A CGT exemption is already available for the sale of a person's principal private residence. The exemption applies to any gains made on the disposal of an individual's dwelling house together with land occupied up to an area of one acre, excluding the site of the house. Full CGT relief applies when the period of occupation matches the period of ownership and partial relief applies where the house has not been occupied by the individual for the full period of ownership. The beneficiary of a gift or inheritance in the form of a residence or dwelling house is exempt from capital acquisitions tax, subject to certain conditions this might be of particular relevance to elderly parents who gift their residence to a child who does not own residence in his or her own right.

While there is no stamp duty exemption in place, a rate of 1% on the purchase of a property would not represent a serious disincentive to a property owner considering trading down. In the circumstances, the Minister for Finance, Deputy Noonan, has no plans to introduce an exemption along the lines suggested by the Deputy. However, I will relay the Deputy's views to the Minister and I might come back to him regarding how we can best deal with supply in the Dublin area.

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