New home buyers to claim VAT back on their income tax from 2017

Voluntary

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Would reducing the payment to the local authority to get a site serviced not be a better option?
It's been calculated that 83k on each 230k new build goes back to Exchequer in levies and taxes. This is over 30% of each new build costs.

The measures could be wider, VAT is only 13.5%. Scrapping development levies would shake the market even more.
Pushing the costs of building social housing on the young struggling families looking to buy a home is also cruel. Social housing should be financed from the general taxation. Currently developers pay huge money to free themselves from the requirement of providing X % of social houses in each estate. This cost is and must be pushed further on the buyer - there's no other way.
 


GDPR

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Plenty, plenty of land in Dublin and around, but with horrendous planning restrictions and without proper infrastructure.
Also, Ireland must be one of very few countries where a regular Joe can't simply browse hundreds of ads with building plots, buy one and build. No, we need to have estates with every single house looking boringly the same.
Some of the planning restrictions I can understand, would result in much lower heating costs and offer a more attractive place to live, but this does not justify adding multiple 1,000's to build and purchase costs. A suitable balance can and must be achieved.
 

mr_anderson

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The schema may mean the cost to a local working family (taxpayer) will only be 260k for a 300k house, while it still be the full 300k cost for foreign investors / tax avoiders.

Unfortunately not entirely true.
Tax avoiders have a habit of paying taxes when it's in their interests to do so.
 

mr_anderson

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I've often thought that ad looks like these two dopey eejits have lost their pants to the bank.
But are trying to pretend everything is fine to onlookers.

Wait, I see it now ... these two represent the bank.
They are the managers !
 

GDPR

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It's been calculated that 83k on each 230k new build goes back to Exchequer in levies and taxes. This is over 30% of each new build costs.

The measures could be wider, VAT is only 13.5%. Scrapping development levies would shake the market even more.
Pushing the costs of building social housing on the young struggling families looking to buy a home is also cruel. Social housing should be financed from the general taxation. Currently developers pay huge money to free themselves from the requirement of providing X % of social houses in each estate. This cost is and must be pushed further on the buyer - there's no other way.
I would support a substantial reduction or removal of planning levies for those strategic areas that are serviced, to get the needed higher densities and volume of housing going. We can't continue with this sprawl model which just leads to more and more long distance commutes.
 

Voluntary

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Some of the planning restrictions I can understand, would result in much lower heating costs and offer a more attractive place to live, but this does not justify adding multiple 1,000's to build and purchase costs. A suitable balance can and must be achieved.
I think a lot of cheap land in and around Dublin could be quickly made available for building with a bit of good will.
 

GDPR

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I think a lot of cheap land in and around Dublin could be quickly made available for building with a bit of good will.
I'd start off with underutilised state owned land which the likes of ESB, OPW etc etc have zero interest in developing. CPO it at its current rate, and get residential, commercial uses, whichever makes sense. Low land costs, little or no planning levies...
 

Voluntary

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I would support a substantial reduction or removal of planning levies for those strategic areas that are serviced, to get the needed higher densities and volume of housing going. We can't continue with this sprawl model which just leads to more and more long distance commutes.
It's true, but is there really a long distance commute if you're in/around Dublin? I'm talking distance and not time. People now choose once again to commute 40-50 km instead of commuting 5-10km from Dublin's edges.

Why not let local authorities buy/take over land, maybe even compulsory purchases of city surrounding farm land, make some initial design regarding the layout, divide into small plots and sell to private buyers who could then hire their own small contractors who would build according to the general layout prepared by local authorities?
 

good dog

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Will banks 'allow' this tax-back in their 3.5 x income calculation ?

If they do, then all it will accomplish is higher house prices.

But then, that's precisely what Noonan has indicated he wants.
Even though I hope to see the day that Noonan is locked up in prison somewhere in the world in this instance he is correct, we need to see higher house prices to encourage building again. Noonan of course wants higher prices so that the few buyers of Nama properties make a killing at the taxpayers expense.
 

GDPR

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It's true, but is there really a long distance commute if you're in/around Dublin? I'm talking distance and not time. People now choose once again to commute 40-50 km instead of commuting 5-10km from Dublin's edges.

Why not let local authorities buy/take over land, maybe even compulsory purchases of city surrounding farm land, make some initial design regarding the layout, divide into small plots and sell to private buyers who could then hire their own small contractors who would build according to the general layout prepared by local authorities?
The better local area plans or master plans produced by Councils do that. You need input of urban designers and other disciplines to aid planners to get the best results. Purchasing the land requires political will and obviously money.
 

Voluntary

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The better local area plans or master plans produced by Councils do that. You need input of urban designers and other disciplines to aid planners to get the best results. Purchasing the land requires political will and obviously money.
Purchasing the land requires political will, that's for sure. It would not cost any money, as LA would pay for farm land via compulsory purchases (low prices) and could sell small plots with planning permission already sorted. This would only require some money upfront, which would be paid back by buyers.
 

GDPR

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Purchasing the land requires political will, that's for sure. It would not cost any money, as LA would pay for farm land via compulsory purchases (low prices) and could sell small plots with planning permission already sorted. This would only require some money upfront, which would be paid back by buyers.
The best way, politically, would be a city mayor type system. Everyone answers to him/her. He/she organises a suitable area to be designated for strategic development. He/she makes sure that everyone in charge of public services provision from health, education, broadband, public transport, water, sewer, surface water, roads etc etc are all on the same wavelength and committed to their part, to get an area marked for strategic and quick development, up and running. All these service areas have their own agenda, so you got to have someone with the necessary political clout to bang their heads together.
 

mr_anderson

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Even though I hope to see the day that Noonan is locked up in prison somewhere in the world in this instance he is correct, we need to see higher house prices to encourage building again. Noonan of course wants higher prices so that the few buyers of Nama properties make a killing at the taxpayers expense.

Higher prices = more debt.
The very strategy that got us into this mess in the first instance.

It's far more sensible to force prices down, thereby allowing buyers a roof over their heads without the accompanying noose.

The government, through it's insane taxation policy, is purposely increasing the costs of building property.
Thanksfully, they have hit a stumbling block because the central bank wont allow buyers borrow enough money to swamp themselves in debt by paying the build costs and taxation.

Shelter, like food is an essential item.
Yet why does the former attract zero VAT, but the latter 13.5%.

Furthermore, in having to borrow an additional amount simply to pay this tax, homebuyers end up paying a multiple of this to the banks.

Insane.
 

JCR

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I didn't give this much thinking but I must admit this is an interesting idea.

Tax break for new house buyers mooted by Michael Noonan



Taking a 300k new home as an example, 13,5% VAT equals over €40,000. If no upper limit is applied to the amounts to be claimed back, tax paying house buyers would get quite large financial relief.
In this particular example a family on 60-80k income would probably live tax free for 2 years after buying a new house.

Noonan may be right on giving tax breaks to buyers instead of giving them to developers.
This would also mean the VAT back would go to Irish taxpayers and not offshore investment funds who don't pay income tax here.

What do you think?
I've got a good idea. Why don't we shove as much of GDP into the property sector as we can? What could possibly go wrong, its bricks and mortar mate, innit Del Boy? Thats right Rodney.

Jokers.
 

HarshBuzz

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They still have to comply with the CB regs.

Answer this very simple question and the light will dawn: is the quantum of Irish mortgage debt (a) increasing or (b) decreasing?

Once you know the answer (hint: it's a consonant), then you'll know why your fears of a new credit bubble are baseless.

Those ads are very annoying though.
 

HarshBuzz

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I think a lot of cheap land in and around Dublin could be quickly made available for building with a bit of good will.
With a bit of 'site tax' I think you mean.
 

Voluntary

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With a bit of 'site tax' I think you mean.
There's thousands of hectares of farm land in and around Dublin which could be acquired cheap via compulsory purchases for strategic purposes and transferred into a development land.
Implement this and current land hoarders will be rushing to build on their land as with plenty of development land coming into the market they'd be afraid of loosing the value long term. It's a simple supply / demand issue. The land is only so expensive as there's a lack of it (while in the reality there's a lot of it, but artificially restricted)
 

Voluntary

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Higher prices = more debt.
The very strategy that got us into this mess in the first instance.

It's far more sensible to force prices down, thereby allowing buyers a roof over their heads without the accompanying noose.
I can't really see how the proposed scheme would put inflationary pressure on house prices.
End prices will be still restricted by credit limits, however to the end buyer a new home would long term cost 30-40k less (tax credits) therefore even putting some deflationary pressure on the current stock.
A current house priced 300k will still cost 300k, a brand new house costing 300k will in the long run cost home buyer (paying taxes) only 260k. So there's some inflationary pressure on new stock (developers can use the schema to slightly top up the prices), however there's also deflationary pressure on current stock, as current 300k house will be compete against a new 300k house with 40k cashback.

At the end I think the scheme is rather neutral in terms of house prices. It will however leave more money in families pockets (less debt).
 


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