With so much talk about medical cards, third level fees and education cut-backs, many have forgotten about the Budget 2009 implications for Property. Sellityourself.ie looks again at the budget changes which impact on the Property market. As a property buyer or property seller, does Budget 2009 represent a Trick or Treat for you?
1. Mortgage Interest Relief : A definite Treat for First Time Buyers, mortgage interest relief will be increased from 20% to 25% for the first two years of the mortgage, and to 22.5% in the third, fourth and fifth years. A bit of a trick though for Non-First Time Buyers - to fund the increase for First Time Buyers the mortgage relief for Second Time Buyers will be reduced from 20% to 15%. These changes will come into effect from 1st January 2009 and will apply to those who purchased property after January 1st 2005.
Treat : In effect the maximum monthly relief for a first time buyer couple increases from €333 per month to €416 per month (and half this amount for a single buyer)
trick : The maximum relief decreases from €1200 per annum to €900 for a couple and €600 to €450 for a single person.
2. Home Choice Loan Scheme : Another Treat for First Time Buyers as the Home Choice Loan Scheme effectively makes 92% mortgage loans available to buy new houses for people who have been refused a mortgage from a bank or building society. The Government loan will be available to first-time buyers of new houses, to a maximum loan of €285,000, and a maximum loan to value ratio of 92%. According to the minister for housing the scheme's purpose is 'to facilitate, rather than incentivise, first-time buyers who wish to purchase a home'.
While it may be considered a 'Treat' for First Time Buyers, many people are shouting 'trick' claiming the scheme is subprime lending in disguise. Others are criticising the scheme claiming that because it only applies to new houses the scheme is nothing more than a concession to developers and a way of bringing in more VAT to the government coffers. Trick or Treat? You decide!
3. €200 charge on Second Property : The owners of second homes will be required to pay a €200 on each non-principal residence which they possess. A 'trick' for owners of multiple properties - but not many are crying over this one.
4. Commercial Stamp Duty reduced from 9% to 6%. Treat! The reduction should help attract investment into commercial property, in particular foreign investors may be encouraged to invest in Irish commercial property by the more equitable 6% rate.
5. Finally the standard rate of VAT will increase from 21% to 21.5% with effect from 1 December 2008. The 'Treat' here is that the rate of vat which applies to new houses was left unchanged at 13.5%. The 'trick' is that Property Sellers who use an estate agent to sell their property will have an even bigger bill to pay their agent as the VAT that is applied to the agents commission fee will increase to 21.5%. Yet another reason for Property Sellers to go the SIY route and cut out the estate agent! Those interested will find all the information on Sellityourself.ie...
- SELLITYOURSELF.IE DIRECTOR, Anne-Marie Doyle
