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Anti speculative property tax Back  
The new tax affects principally holiday homes acquired after July 14; property acquired by parents for use by children or vice versa; and rental properties not complying with certain conditions.
The rationalisation for the new tax is provided on page 87 of the June 2000 Bacon Report. The new tax is to counter demand for property by those buying earlier than they otherwise would, because they anticipate price increases, and who are buying as an investment. The actual victims of the new tax, as described above, will find it difficult to relate their situation to the stated objective.

Consider parents in a rural area who expect their teenage children to attend college in Dublin, Cork or Galway (to name but a few areas). It may seem sensible to them that they should purchase a flat close to the college for use by their children over several years as they attend college. Where they do not charge the children rent or don’t comply with various regulations relating to rented property, or where they do not actually gift the property to the children, the apartment will attract the new tax.

Students attending the college must live somewhere. Theirs is a real demand for accommodation. The rented residential accommodation sector is already targeted with a 9 per cent stamp duty and a denial of interest deduction in computing income tax on rents. Now the provision of the accommodation by parents is targeted. What sensible political, social or economic objective is being pursued here?

A child from a low income background does well and buys a property for use by his parents. Once again, if he does not charge them rent, or gift it to them, the property will attract the new tax.

It is clear in this instance that the new tax is not a tax on the purchase of a property for the parents, it is a tax on the failure to charge them rent, or a failure to make them a gift of the property. Once again, what sensible objective is being pursued here? What has it all to do with speculative demand for housing?

Wrecked cottages
A city dweller buys a run-down cottage in the West of Ireland for use as a holiday home. The property will attract the tax. How does the acquisition and renovation of a 19th century cottage in the West of Ireland have any relevance to the declared objective of discouraging people from acquiring property in the expectation of future price rises?

Wrecked marriages
Consider a marriage break-up, where one spouse transfers a rental property and a holiday home, to the other spouse as part of the settlement. If the transferor spouse held these properties on 14 July, they would not have attracted the tax while they continued in his ownership. But on transfer to his spouse, the holiday home becomes subject to the tax since it is not that spouse’s principal private residence, and the rental property may become subject to the tax if all of the conditions relating to compliance with regulations etc are not met. It is difficult to see how property transfers in the course of the divorce settlement has anything to do with speculative demand for housing. Yet the tax catches it.

The anomalies described above are just a few of those in the legislation. Oddly enough, the one thing not explicitly targeted for tax is the residential property left unoccupied. It is true that that may be caught by reason of being neither a rental property nor a principal private residence, but if it is in truth the target of the whole tax (and common sense would suggest that it is the only rational target when dealing with a housing crisis) would it not have been easier to say so?

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