Owners of non-principal private residences purchased for rental and investment purposes will have to pay an annual €200 property tax, under legislation published by the Government today.
Minister for the Environment John Gormley said owners of residential rental property, holiday homes and vacant residential properties will be liable to pay the charge which will raise an estimated €40 million for local authorities.
A number of exemptions will be made - including for those who have temporary ownership of a second home for a short period while moving house or for those who own newly constructed and unsold properties.
Some 260,000 dwellings will be affected - of which the majority are investment properties. Some 60,000 holiday homes will also be affected.
The Local Government Charges Bill 2009 is one of the measures announced in the Budget aimed at bridging the gap between public spending and income.
“This Bill represents a significant broadening of the revenue base of local authorities” said the Minister. He went on to say that the measure is significant because it recognises that local authorities should not be unduly dependent on central government funding and that its importance outweighs the level of revenue which it will generate," the Minister said.
“It’s now generally accepted that our economy, and especially our tax revenues, has been overly reliant on activity in the construction sector."
"The decline in the yield from transaction taxes - such as stamp duty, capital gains tax and value added tax - on property generally has been a major factor in the imbalance in our public finances which the Government has had to address. The correction has been sharp and painful, and more needs to be done” he added.
Minister Gormley said the charge represents a new form of revenue stream, which would be derived and spent locally and was one that will not be subject to the volatility associated with transaction based property taxes.
