Jill Kerby

Let Revenue deadlines go hang – it pays to delay

The Revenue Commissioners has decided that the local property tax return for anyone who opts to pay their tax in a single lump sum via a debit or credit card, by cash or cheque will be this Thursday (Nov 7),

This deadline is nothing but a stick they have handed you with which to beat yourself.  Don’t do it, unless you are tax masochist (the Revenue love such people who pay them in advance) and don’t mind losing access to your capital and any interest it might be attracting.

I’m told that large numbers of mostly older people have preferred the lump sum option because they don’t have a computer or don’t know how to use them for bill payments, but this is a feeble excuse in an era of Grey Surfer technology awards that are promoted by lobbyist for the elder sponsor.

The simple truth is that not making an effort to get on-line, whether with the help of a family member or friend, local Consumer Centre or library means you are financially penalised, in this case by an agency of the state.

The Revenue Commissioners do not want your cheques or your debit and credit card payments on the grounds that they will incur a merchant processing charge they decline to pay. Even post office customers will be charged €1 every time they pay their LPT in full or part-payment in cash or with a debit card.

The Revenue insisted last week that how the tax is paid is left to the homeowner. They say they have provided the widest range of methods, but by setting favourable later deadlines like March 21st for lump sum electronic payers and emphasising easy monthly electronic payments, they’ve made their preferred method of choice eminently clear.

Last week the Tanaiste Mr Gilmore tried to sound very stern by saying that the Revenue Commissioners must accommodate everyone who is doing their best to pay their 2014 LPT on time.

He clearly doesn’t understand that the logistics of this tax (and all others) are drawn up to accommodate the State’s tax collector’s first, and then the rest of us as tax serfs.

And if you don’t believe me, do read the lengthy ‘Enforcement’ section of the Finance (Local Property Tax) Act 2012 and the powers that authorised Revenue officials have – including entering your property to decide for themselves how much it’s worth and how much you owe.

And if you think this story is just a storm in a teacup, wait until the tax itself, at a mere 0.18%, starts inching up to the 1% rate that so many property tax jurisdictions charge.

It won’t be the method of payment we’ll be complaining about then.

The flurry of ‘For Sale’ signs popping up in my Dublin city centre neighbourhood in the past few weeks and even across the Liffey around the Phoenix Park suggests that the mini-price boom that began last spring in south Dublin is rapidly spreading right into the inner Victorian housing archipelagos of 7 and 8. 

The fashionable neighbourhoods of Rathmines, Ranelagh and Rathgar were infected with the new property price virus during the summer and you can’t walk down a single leafy street anymore without seeing ‘Sold’ signs everywhere.

Choice areas of Fairview, Drumcondra, Raheny are also entering the bubble’s spotlight, Glasnevin and Clontarf having succumbed around July, I’m told by friends who spent the summer observing the moving vans on their North Dublin streets.

The CSO say that the average Dublin house worth €300,000 went up by €12,000 in September alone. Long may it last if you need to sell and are no longer in negative equity, or if you are trading down or just want to get out of the country and start a new life in a place where there isn’t the risk of lifelong debt-serfdom.

I’m guessing this price surge will run out of steam once the market runs out of cash buyers, probably when someone they listen to points out the puny net return most of them are getting on their capital; when the market runs out of sufficient numbers of professional, first-time buyer couples who somehow avoided the first boom and have squirreled away big-down payments and when the banks finally acknowledge their billions in bad mortgage debts.

The latter is going to have an impact not just on supply and demand, but on prices and future lending practices until the all-clear is sounded.

God forbid there’s a rise in mortgage interest rates in the meantime though this is more likely to occur within the Irish banks than prompted by the ECB.

No one knows better than Frankfurt central bankers (or their counterparts in London and Washington) that a lift in interest rates anytime soon will tip millions into bankruptcy.

Are you as flummoxed as I am about the latest extension to the seven year capital gains tax exemption for investment properties?

The Minister for Finance announced the original tax wheeze back in Budget 2013 – early December 2012 remember when the property market was still officially in decline. He said he was exempting from capital gains tax, investment properties that were purchased between December 7, 2011 and December 31, 2013 that were held for at least seven years by their owners.  On October 14, the Minister extended the purchase deadline to December 31, 2014.

This is just more tinkering and interfering with an already hyper-dysfunctional market that has incubated a mad little Dublin property bubble while the rest of the country remains in the on-going post-Tiger property bubble.

Not only is encouraging property investing here unnecessary, but due to EU and EEA economic agreements, the 33% CGT exemption applies to domestic or commercial investment properties purchased abroad as well.

So much for spending in the Irish economy.

One financial adviser told me last week that some of his cash-rich older clients, disgusted by derisory deposit returns, 41% DIRT, and fearful of most other asset classes are again showing interest in overseas property for tax reasons.

The danger, he said, is that they’ll be part of a new flock of sheep who all get caught trying to sell their “sure thing” properties at the same time in 2015.