Maintain property tax reliefs - IPAV

The head of the Institute of Professional Auctioneers and Valuers (IPAV) has urged his 800 members to respond to the consultation document by the Minister for Finance on the proposed abolition of property-based tax reliefs. Cavan auctioneer and IPAV President Padraig Smith points out that thousands of ordinary income earners were encouraged to invest in schemes such as Section 23 relief in specific areas in order to help rejuvenate them. "They also seemed an attractive way of building up a pension fund at the time," he claimed. These developments would not have occurred without the tax incentive offered. However, the proposed withdrawal of these reliefs as contained in Budget 2011, if implemented, would mean many will now suffer great financial distress, Mr. Smith added. "The purchase of these properties was made by these investors in good faith," says IPAV President. "The Budget changes, if implemented in Budget 2012, will further depress property prices, will increase re-possessions by financial institutions and will bankrupt investors thereby increasing the financial burden on the already stressed taxpayer." Mr. Smith said such a move would be a breach of faith by the Government which was honour-bound to allow the reliefs to run their normal life span as had been planned by the investors. He was a member of a high power delegation from the IPAV that included CEO Fintan McNamara and National Council members Tom Crosse Meath and Ron Duff Limerick, which met the Minister for the Environment, Community and Local Government Phil Hogan TD for talks recently. Mr. Smith described the meeting as cordial and they received a fair hearing. "Mr. Hogan is an auctioneer himself, a member of our institution, and is well aware of our concerns." The delegation urged Minister Hogan to revisit these proposals in the upcoming Budget and to restore the reliefs and allowances as originally provided for under the Taxes Consideration Act in the Finance Bill 2011. They pointed out to the Minister that the capital value of most properties had reduced significantly with the collapse of the housing market, house prices had fallen nationally by 11.9% in the year to March 2011 and by nationwide average of nearly 40% since the height of market in mid-2007. The delegation outlined a number of other issues that need to be taken into account in conjunction with the information already gathered which includes financing arrangements, commercial reality of transactions, effect on local employment, statistical analysis, response to social need and investment incentive, legitimate expectation and economic burden, equal taxation, tax saving and international perception as well as the new €100 house levy. "The increased burden on investors to meet their financing obligations without the expected tax relief could lead to significant bankruptcies, job losses and a loss of investor confidence within Ireland," quoted Mr Smith. "Due to falling rents over the past five years and the inability to sell due to reduced capital values and the crystallisation of a claw-back event, as well as a general lack of demand and available credit from banks in the housing market, any proposed restriction on tax relief available constitutes a severe economic burden on these property owners." "We therefore request that the department consider carefully before mending the reliefs or allowances previously provided for and seek to reassess the situation when further information becomes available and a more accurate cost analysis can be undertaken," concluded Mr Smith.