# Stamp Duty Debate



## auto320 (13 Nov 2006)

Just been giving some thought to the debate on whether or not Minister Cowen will tinker with stamp duty limits in the budget in December.

The entire real estate industry in ireland seems to be of the one mind on this, that the market is in stagnation because of the "wait and see" attitude of buyers. There is no doubt that sales have slowed considerably, whether or not this is caused by uncertainty in the stamp duty field is anybody's guess.

However, what if he makes the necessary adjustments to the stamp duty limits as per the not-so-subtle lobbying of the real estate industry, and sales don't pick up immediately? Nobody seems to have thought of this scenario, but they should consider it. If the market reacts in this way, we may well be facing a huge slide as panic sets in, with the potential to wipe up to 50% off values in a matter of months.

Not possible? Oh yes it is, and all the factors are in place for such a slide to happen. If the market does not pick up quickly post-budget, even with no adjustment to stamp duty, we will have some serious do-do on the fan blades.

Just thought I'd mention it!


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## bazermc (13 Nov 2006)

Ahhhhhhhhhhhhhhhh jaysus not this again see here for my opinion on the matter


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## auto320 (13 Nov 2006)

Are you missing my point, not covered in previous threads?

Essentially what I am trying to point out is this.....

A cut in stamp duty is being hailed as the cure for the current stagnation in sales.

What if Cowen makes such a cut, and the market doesn't pick up straight away?

Even if he doesn't make a cut, that will at least put an end to the uncertainty, and the market should pick up. So what if it doesn't?

At that point I would suggest that we have a problem.

Just pointing it out, nobody seems to have thought this thing through beyond the budget, all commentators have just assumed that everything will pick up agian ince the uncertainty is taken away.


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## sandymount (14 Nov 2006)

It seems strange to me that the "wait and see' attitude is only on the buyers side of the equation. 

There is plenty of property for sale so sellers don't seem to think that there will be changes in the budget otherwise they would wait until next year to sell, all things being equal they would get a better price if there was a stamp duty reduction.


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## phoenix_n (14 Nov 2006)

Whilst i can't comment on the effect on the current confusion of stamp duty on the property market i can say with reasonable certainty that the rates will not change in this budget.


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## Afuera (14 Nov 2006)

auto320 said:


> The entire real estate industry in ireland seems to be of the one mind on this, that the market is in stagnation because of the "wait and see" attitude of buyers. There is no doubt that sales have slowed considerably, whether or not this is caused by uncertainty in the stamp duty field is anybody's guess.


 
I think that blaming the current stagnation on possible changes in the budget is a red herring. This did not happen last year or most of the previous 10 years for that matter.

The daft report related to Q2 of this year was able to show that a slowdown has been happening since the end of April. Conveniently this is about 5 months after the ECB started raising interest rates and IMHO is a much more realistic reason for what is currently happening.

You're quite right in pointing out that if there is not a pick up after the Budget then there really are not much more excuses left. It would be undeniable that there is a major shift happening in the market.


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## auto320 (14 Nov 2006)

sandymount said:


> It seems strange to me that the "wait and see' attitude is only on the buyers side of the equation.
> 
> There is plenty of property for sale so sellers don't seem to think that there will be changes in the budget otherwise they would wait until next year to sell, all things being equal they would get a better price if there was a stamp duty reduction.


That's exactly my point. It's symptomatic of an industry where most people rely on the property pages for information, perhaps unaware of how these commentators continue to talk up a market that has maybe already turned sharply. In my own view, the market has already gone into reverse, but most people haven't noticed yet and they are waiting for a miracle to happen post budget.

It is my belief that as soon as it is noticed that the budget hasn't provided any impetus to the market, the penny will start to drop and more and more properties become available. Supply/demand will result in a steep drop in prices on the second-hand market, and panic will start to set in. The next mindset will be that of small investors who bought a few years back; they will convince themselves that as long as they get anything over what they paid for the property, they are better off, so discounting will follow. The next step from these sellers is to decide that if they get anything over and above what's left on the the mortgage, they are ok, so potential for more panic.

I don't want to be a prophet of doom, but somebody needs to counteract the hype from the property "journalists" who continue to talk up the interests of their advertisers.


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## onekeano (14 Nov 2006)

phoenix_n said:


> Whilst i can't comment on the effect on the current confusion of stamp duty on the property market i can say with reasonable certainty that the rates will not change in this budget.



How come? Are you in the Dept of FInance?

Roy


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## southsideboy (14 Nov 2006)

I think that FF are going to be forced into stamp duty reform by the PDs and more importantly the general public. The government aren't stupid. They know that reducing stamp duty will probably lead to a surge in property sales in the new year. Of course all the other factors will still be there - supply, demand, interest rates etc. But a reduction in stamp duty will create enough of a splurge to keep things going onto the general election. Of course this will just be temporary.

I very much doubt that sufficient stamp duty reform will not lead to an increase in sales. This is bound to happen. I agree however that the wait and see approach is a bit of a red herring, although I think that it has caused more of a dramatic slowdown than one might have expected.


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## Remix (14 Nov 2006)

It's not hard to find houses where the asking price has been reduced by an amount similiar to stamp duty due - and the house still hasn't sold.

I'm not convinced that stamp duty adjustment will provide the boost in sales and prices that the VIs are hoping for.

It's true that last time it did but at that point it was throwing fuel on a fire, this time round it could be the "sentiment" fire has gone out and it won't make much difference.


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## Abbeykiller (14 Nov 2006)

southsideboy said:


> I think that FF are going to be forced into stamp duty reform by the PDs and more importantly the general public. The government aren't stupid. They know that reducing stamp duty will probably lead to a surge in property sales in the new year. Of course all the other factors will still be there - supply, demand, interest rates etc.


 

The housing market is not going to be controlled by any tampering that Cowen does. It will remain at risk of dropping sharply or slowly. If he was to make a change and there was a subsequent surge in prices followed by a crash in a year or so - Cowen would be remembered as the Minister who caused the crash. The beast is best left to it's own devices now and I think from his recent statements Cowen knows this.


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## No-one-home (14 Nov 2006)

sandymount said:


> It seems strange to me that the "wait and see' attitude is only on the buyers side of the equation.
> 
> There is plenty of property for sale so sellers don't seem to think that there will be changes in the budget otherwise they would wait until next year to sell, all things being equal they would get a better price if there was a stamp duty reduction.


 
I think that we are seeing a two-fold effect, a) a serious slowdown in the market and b) on top of this we now have a wait and see effect following McDowell's comments. 

Who the hell is going to close on a €500,000 house this month when they _could_ save a chunk of the €45,000 stamp duty bill by waiting till after the budget? Even if house prices have been discounted this scenario still remains the same.

Of course the sellers are not adopting a wait and see approach on stamp duty, why would they? 

Most sellers accept that their property will not sell before the budget, but viewings are still happening and sellers are now jockeying for position in the hope of exiting the market in the early months of the New Year at current price levels.

In any case I would concur with Abbeykiller's view that Cowen's recent statements suggest that he is not going to tinker with the property market by way of stamp duty changes.

However given the Election next year the pressure on him will be intense.

As I see it, if stamp duty is reduced or abolised in the budget the market will be sustained for 6 to 9 months at best.

If no changes in stamp duty are made, the stand off will continue until the end of March and then the market will plumet.


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## liteweight (16 Nov 2006)

Mr. Cowen is not as adamant about stamp duty reductions as he was. Now he says he refuses to be drawn on the matter, while he had insisted there would be no change. Public perception seems to be that the poor FTB is crippled with stamp duty payments on top of already over priced homes. In fact, out of the approx. 3 billion collected in stamp duty last year, only 70 million was paid by first time buyers. Given this, it might not go too badly for FF if they abolish stamp duty completely for first time buyers. They get the kudos attached to making homes more affordable for young people and yet, in the grand scheme of things, it's comparatively cheap for them. 

Should they decide to abolish stamp duty for FTBs it might give the secondhand market a chance against the new builds. That is of course if all in sundry don't get too greedy and in the process shoot themselves in the foot. If reductions are made across the board it would probably give the market another boost, at least for a while. Personally, I agree with Abbeykiller that no tinkering with stamp duty should take place. More than likely the outcome would be the same as in the past, price surges which definitely cannot be sustained this time.


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## thewatcher (16 Nov 2006)

liteweight said:


> Should they decide to abolish stamp duty for FTBs it might give the secondhand market a chance against the new builds.


 
As you've said yourself the whole FTB stampduty "issue" is just a smokescreen as they contribute relatively little to stampduty revenues.
   The only thing that will possibly prevent stagnation in the secondhand market is something done for owner occupiers of secondhand properties as these are the people who get hit the worst.The trader uppers if you will, there's a lot of people out there who bought apartments in the last few years who are probably looking to move into houses in the future, stampduty for owner occupiers of secondhand properties acts as a very heavy barrier against this.


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## beattie (16 Nov 2006)

liteweight said:


> price surges which definitely cannot be sustained this time.


 
And the ones in the past could be justified?


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## Remix (16 Nov 2006)

A good article in the Indo that explains why Cowen will (or should) stay away from Stamp Duty for now.



> If ever there was a time for politicians to leave the market to find its own way - and make it crystal clear that they will leave it alone - this surely is it.


 
Time for a steady hand....to avoid a crash


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## southsideboy (16 Nov 2006)

I think that Cowen has a choice. He can either make significant changes to stamp duty which would increase the chance of a crash in the medium term as it would probably result in more price increases for probably another 12months or he can do nothing and let prices continue to drop as the housing inventory increases... I think he'll choose the first option...he'll probably adjust the bands a good bit, particularly for first time buyers. If he doesn't do this, buyers will not return to the market as some commentators have been predicating. Instead there will be an anti-climax and prices may drop further. I personally don't believe there will be a 'crash'. I'd say prices will have levelled off by the end of 2007 but coming up to the elections in mid 2007, Cowen will want a feel good factor about property.


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## Afuera (16 Nov 2006)

In the past, I think that increases in the stamp duty bands were able to affect the price of houses only because the banks were willing to stretch out the conditions and amounts being lent (up to around 7 times a couples salary). Currently though the banks are being warned left right and centre to tighten up their lending and every increase in interest rates automatically restricts the amount they can lend anyways. 
Am I missing something here but how will an increase in the the stamp duty bands make any difference to the market if many have already ran into the wall of affordability?


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## Remix (16 Nov 2006)

Cowen, this afternoon, continues in his emphatic use of words and phrases like

'prudent'
'fiscally sustainable'
'economically appropriate'
'politically responsible'

Giving a boost to the property market at this point in time would seem to violate all these terms. I don't think he'll do it.


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## phoenix_n (16 Nov 2006)

Remix said:


> Cowen, this afternoon, continues in his emphatic use of words and phrases like
> 
> 'prudent'
> 'fiscally sustainable'
> ...


 
Of course he won't. 

Even the sunday times knows that.


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## auto320 (16 Nov 2006)

Whether he does or not is irrelevant to a great extent. The issue of concern is whether the market picks up post budget or not. If it doesn't, then it wasn't the stamp duty issue that was keeping the lid on it, and we are on a slide.


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## liteweight (16 Nov 2006)

thewatcher said:


> As you've said yourself the whole FTB stampduty "issue" is just a smokescreen as they contribute relatively little to stampduty revenues.
> The only thing that will possibly prevent stagnation in the secondhand market is something done for owner occupiers of secondhand properties as these are the people who get hit the worst.The trader uppers if you will, there's a lot of people out there who bought apartments in the last few years who are probably looking to move into houses in the future, stampduty for owner occupiers of secondhand properties acts as a very heavy barrier against this.



I agree and I'd also add those who wish to downsize as children leave the nest. Often when faced with buying a much smaller property they are finding that the stamp duty liability eats into what should have been a retirement fund. Quite a few of my acquaintance have decided to stay put because of this.


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## liteweight (16 Nov 2006)

beattie said:


> And the ones in the past could be justified?



No I don't believe the price rises of the past few years can be justified but they were sustainable IMO because of low interest rates and the willingness of lenders to supply many, many multiples of the purchasers salaries. Now we have rising interest rates, it's a much less affordable option to buy.


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## liteweight (17 Nov 2006)

Does anybody know when stamp duty on property came into being? I heard today that it was brought in in the early 70s to support Government financing and was only ever expected to be a temporary measure, like so many of our other levies.


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## askalot (17 Nov 2006)

SD rates are high but to reduce them now would undermine the good that rising interest rates are doing in cooling down house prices. Any reduction in the tax will be followed by an increase in prices. 

It would amount to an attempt to buy an election by massaging the market and would be ill advised, dangerous and irresponsible. Which means the government will probably do it!


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## Maine (17 Nov 2006)

OOps !


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## Maine (17 Nov 2006)

IMO it will be tempting to give FTBs a boost by coming up with some SD scheme possibly rebate etc for FTB owner occupiers.

This would give a nice push to the FTB market in Q1 / Q2 and tee it up nicely for an election. 

In any event the budget is pro cyclical at the top of cycle with plenty of public sector hiring and infrastructure spend which will increase the FTBs supply in the short term. Infrastructure spend is good for govt as the cash goes out to the voting country folk. However longer term this will drive wages and squeez the exporting economy who will have to give wages increases to retain staff from going to public sector.


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## Remix (29 Nov 2006)

Response from Cowen today as pressure from various VIs mount.

It looks like he sees right through the "help the FTB" good intentions. 



> Asked about the matter in Dublin today, the minister refused to reveal his intentions regarding the tax, but said the
> Government needed to ensure that it does not take measures which will increase house prices.
> 
> "What we really need to keep an eye on here is to make sure that we avoid inflationary effects and make sure that,
> if any help can be provided, that it's provided for the purchasers exclusively


 
http://www.breakingnews.ie/ireland/?jp=CWIDQLKFCWCW


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## plaudit (29 Nov 2006)

In my opinion it should be given in some sort of tax relief that is "hidden" from the vested interests, IE they won't know if you are a FTB or not.

A few years ago we had the FTB grant of £3000 (old money) but all you saw was builders advertising the prices as being £100000 nett of grant, so its just added to the price.

You should have to apply for the stamp duty relief as a tax credit, this means that people involved in tax evasion also miss out.


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## conor_mc (29 Nov 2006)

To be honest, I think he could do either of two things (or both)....

1) reduce/remove stamp duty on second-hand homes for FTB's, which would mean that developers wouldn't get to pocket the difference, residential sellers may though.

2) Significantly increase interest relief - putting money back into the FTB's pocket.

Caveat emptor though - I don't believe either of these will "exclusively" help purchasers, but Mr. Cowan is a politician after all - all he needs is for his deeds to have a cloak of respectability.


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## beattie (29 Nov 2006)

conor_mc said:


> To be honest, I think he could do either of two things (or both)....
> 
> 1) reduce/remove stamp duty on second-hand homes for FTB's, which would mean that developers wouldn't get to pocket the difference, residential sellers may though.
> 
> ...


 
I don't see how interference with SD won't cause upward movement in HP's. It will be leaped upon by all the VI's that everything is AOK with the housing market. If Cowen buckles under this pressure he will lose a great deal of credibility.


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## conor_mc (29 Nov 2006)

beattie said:


> I don't see how interference with SD won't cause upward movement in HP's. It will be leaped upon by all the VI's that everything is AOK with the housing market. If Cowen buckles under this pressure he will lose a great deal of credibility.


 
To yourself, myself, and the majority of AAM members who are financially literate, perhaps.

But _if _he can say that all he tried to do was help out the poor FTB and that he specifically avoided putting money in the developers pockets, he'll get away with it.

And he only has to get away with it for another 6 months or so until the election.....


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## beattie (29 Nov 2006)

conor_mc said:


> To yourself, myself, and the majority of AAM members who are financially literate, perhaps.
> 
> But _if _he can say that all he tried to do was help out the poor FTB and that he specifically avoided putting money in the developers pockets, he'll get away with it.
> 
> And he only has to get away with it for another 6 months or so until the election.....


 
Your right, the average joe will believe that the good old Min of Finance has given them a leg up in the market when in fact they will just have to pay extra back to the bank in the long run. 

If FF/PD's were serious about helping the FTB they could skew the market against investors a bit but I doubt if they will contemplate that


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## conor_mc (29 Nov 2006)

phoenix_n said:


> Cowen today:
> 
> *What we really need to keep an eye on here is to make sure that*
> *we avoid inflationary effects and make sure that, if any help can*
> ...


 
Of course. But Cowan is a politician, and with an election on the horizon it's all about soundbites and feel-good factor. Help out the poor FTB's, just make sure the developers don't pocket it.... hence aim it at second-hand homes specifically. Joe Buyer and Joe Seller are happy (for a while), Joe Developer can only look on from the sidelines.

Indeed, with all the buildup in inventory over the last 6 months, the inflationary effect of anything Cowan does now could take until election-time to unravel the current impasse in the market. Does it really matter to FF what happens after the election? Will further rises in interest rates let them off the hook by cancelling out the inflationary effect of whatever they do in this budget?


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## phoenix_n (29 Nov 2006)

conor_mc said:


> Of course. But Cowan is a politician, and with an election on the horizon it's all about soundbites and feel-good factor.


 
I dont think FF have anything to fear from the elections. There is no viable alternative. Besides whilst its fashionable to berate any government which is in power i think ahern is doing a good job.


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## thewatcher (29 Nov 2006)

phoenix_n said:


> Cowen today:
> 
> *What we really need to keep an eye on here is to make sure that*
> *we avoid inflationary effects and make sure that, if any help can*
> ...


 
I actually like Cowen myself,seems to be a man of principal and doesn't want to interfere in the the market.Bertie on the other hand could pull any stroke and over rule him.As cowen has been saying all along there will be no changes in stampduty,if there is it will look very bad for him as a future taoiseach,he will have no credibility whatsoever in the future for me .


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## StoppedClock (29 Nov 2006)

phoenix_n said:


> The market at the moment is correcting itself so there is no need for any intervention.
> 
> And agree on Cowen. I am a fan of Ahern but I think Cowen is going to be a very good future leader of this country.


 
I think Ahern is overrated but agree Cowen could be a very good leader.


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## beattie (29 Nov 2006)

StoppedClock said:


> I think Ahern is overrated but agree Cowen could be a very good leader.


 
I don't see how Ahern can have any credibilty left after he told anyone not on the property train to get aboard. I don't think I ever heard a leader of a country make a statement of such financial enormity (except for ones of banana republics). Cowen's moment of truth is approaching with the SD decision.


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## room305 (29 Nov 2006)

I don't get the debate. The government took in more taxes than required - mainly from people who purchased property. Now they want too give it back. Fair enough. Why do it by giving a rebate/discount to the people who are looking to purchase a home now? What use is that to people who already purchased?

Cut income taxes and everybody wins. Simple.


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## Glenbhoy (29 Nov 2006)

phoenix_n said:


> i think ahern is doing a good job.


Phoenix, the icon to indicate sarcasm is  , presumably you forgot to insert it there?


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## TTV (29 Nov 2006)

I think i read somewhere that the plan was to cut the higher rate from 42 to 40 and increase the bands, can anyone confirm this or is it just speculation, or did i just read a comment here earlier?

As for Ahern, I'm a fan of his alright, in that he amuses me greatly, but thats not a quality I look for in the leader of a country - we can judge the Americans for bringing bush back but we're just as bad with Bertie and I would nt bet against him next time. I would nearly rather see him get back in just so he is at the top when this property time bomb explodes, I couldnt bare to hear him gloating over the next few years if he wasnt re-elected, because within months the country would be deep in recession and he could blame it all on us for removing him from power.

I still find it amazing that there is no real alternative in this country, the qualifications, oratorical skills, basic common sense etc required to be leader are non existent all thats needed is to agree with everyone all the time...that cant be that hard can it?

As for Stamp Duty, that has become a real hot point for the budget. The funny thing was McDowell originally spoke about possibly changing it if they were re-elected (if i remember correctly), but now Cowen has to face it in the budget. With recent moves, i'd say he is likely to move on it even though he is totally against it. Berties understanding of basic economics involves understanding what is in the headlines, what they people are saying and invevitably agreeing with them.


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## Glenbhoy (30 Nov 2006)

TTV said:


> I think i read somewhere that the plan was to cut the higher rate from 42 to 40 and increase the bands, can anyone confirm this or is it just speculation, or did i just read a comment here earlier?


I would be very surprised if the rates are cut (and disappointed), but  imagine that bands will be increased generously (if for no other reason than to correct Cowan's erroneous statement last week that people earning less than 50K do not pay tax at the top rate).  IMO stamp duty will go for ftb's (up to a certain level), marginal relief around the various thresholds may also be a runner.


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## pinkyBear (30 Nov 2006)

Cut income taxes and everybody wins. Simple.
Room305  I am in agreement - the teh thing is the central bank no longer have control over interest rates and any major change will push the property prices overboard. 


The best thing is leave well enough alone for the time being and cut income tax.


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## DirtyH2O (30 Nov 2006)

Income tax cut from 42% to 41% is not a hugely expensive measure but it is benefitting top earners the most. Increasing the bands is a more equitable option all round and I've not got a vested interest in this.

I think removing SD for FTB is a terrible idea. 
Problem is people are spending beyond their means, one of the only controls on their bidding is their fear of entering the next SD band.
Solution - raise the band, increase the spending, dig themselves in a little deeper.

Why should FTB get preferential treatment to a trader upper, I'm sure people who bought starter homes find it equally expensive to move but are not a vote winner. The statistics indicate that FTB pay a very small amount of SD anyway - the biggest winner if they had no SD would be the twentysomething buying a redbrick 'starter' home in D4 or D6 with family support.

I'd scrap or reduce mortgage interest relief as well, it's main beneficiaries are investors with interest only mortgages- should be a vote winner come election time. For the opposition! Big difference between politically correct decisions and correct decisions.


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## TTV (30 Nov 2006)

> Originally posted by* DirtyH2O*
> 
> I think removing SD for FTB is a terrible idea.


I couldnt agree more, that is why it is more than likely to be removed.



> Originally posted by* Glenbhoy*
> (if for no other reason than to correct Cowan's erroneous statement last week that people earning less than 50K do not pay tax at the top rate)


I missed that, did he seriously say that? I'd love to see the results of himself or Bertie doing foundation level maths exam or first year (secondary not third level) economics.


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## phoenix_n (30 Nov 2006)

TTV said:


> I missed that, did he seriously say that? I'd love to see the results of himself or Bertie doing foundation level maths exam or first year (secondary not third level) economics.


 
If he did i think we can say that it was a mis-quote. Ahern is an accountant and Cowen is a solictor..........i'd bet they would do better than alot here (including me) in any maths exam.

Don't get this politician bashing........


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## exile (30 Nov 2006)

phoenix_n said:


> If he did i think we can say that it was a mis-quote. Ahern is an accountant and Cowen is a solictor..........



That all depends on your definition of 'accountant'.  I can't help but suspect that Bertie's definition of accountant is something similar to his definition of being "educated at" the London School of Economics.


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## conor_mc (30 Nov 2006)

Glenbhoy said:


> I....(if for no other reason than to correct Cowan's erroneous statement last week that people earning less than 50K do not pay tax at the top rate).


 
Could he have been referring to _couples_ earning less than €50k not paying tax at the top rate?


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## thewatcher (30 Nov 2006)

conor_mc said:


> Could he have been referring to _couples_ earning less than €50k not paying tax at the top rate?


 
What i think he said but i could be wrong was that people earning 50,000 paid less than 20% tax ie. <10,000.

However as i just happen to have my paycheck in my pocket i know this to be bull**** as i've just gone over the 52,000 mark and i've already paid over 15,000 in tax and prsi.


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## Glenbhoy (30 Nov 2006)

phoenix_n said:


> If he did i think we can say that it was a mis-quote. Ahern is an accountant and Cowen is a solictor..........i'd bet they would do better than alot here (including me) in any maths exam.
> 
> Don't get this politician bashing........


Yeah, Ahern is an accountant - how do you make that out??
I don't mind Cowan at all and feel that he is at least competent, but his time spent as a practising solicitor was very short as he has been in the dail since he was 24.



> Could he have been referring to _couples_ earning less than €50k not paying tax at the top rate?


No, I've been searching for the actual wording, here is the article, can't access it to recalculate, but I'll stand by my calculations last week, imo Mr. Cowan is talking a load of blather..... (as always I'm open to correction).

[broken link removed]
*Opposition's tax claims 'blather' - Cowen*

Some 80 per cent of workers pay tax at rates of 20 per cent or less, Minister for Finance Brian Cowen insisted in the Dáil, rejecting as "blather" Opposition claims to the contrary. Login or subscribe for more.


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## TTV (30 Nov 2006)

> Yeah, Ahern is an accountant - how do you make that out??
> I don't mind Cowan at all and feel that he is at least competent, but his time spent as a practising solicitor was very short as he has been in the dail since he was 24.


I cant stand Ahern as a Minister and as an accountant???? (i just passed my acountancy exam online - my degree is in the post, I too am now an accountant) on the other hand I too dont really mind Cowan, as I said earlier if he moves on Stamp Duty it wont be by his choice. But if he is the Minister for Finance and he does not know the rates of tax that the average joe is on then I'm afraid I cannot see how anyone could see this as acceptable for the Minister responsible for Finance.



> Originally posted by *phoenix_n
> * Don't get this politician bashing........


Its nothing personal, It does seem though that blatant incompetence in this country gets rewarded or at the least overlooked..

By the way, I am not politically aligned with any party and i find the alternatives in this country apalling.


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## StoppedClock (6 Dec 2006)

Well that's that, no changes.


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## conor_mc (6 Dec 2006)

StoppedClock said:


> Well that's that, no changes.


 
Probably the best outcome. It would've been very easy to go the populist route, what with all the clamour from the vested interests.


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## StoppedClock (6 Dec 2006)

conor_mc said:


> Probably the best outcome. It would've been very easy to go the populist route, what with all the clamour from the vested interests.


 

Well done Cowen, when can he replace Bertie?


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## Remix (6 Dec 2006)

StoppedClock said:


> Well that's that, no changes.


 

Here's what Cowen said today (Agrees with many posters here)



> In the current market situation, any stamp duty cuts would more likely than not be incorporated into the sale price and so end up in the pocket of the seller. This will *not* help first-time buyers purchasing new homes.


 
Here's an example he gives on how first time buyers will benefit from the tax changes:



> Our firm aim is to help the first-time buyer directly and substantially, not only those who are in the market now, but also those who are already paying their first mortgages. The best way to do this is by way of mortgage interest relief. The Government therefore proposes to double the ceiling on mortgage interest relief for first-time .
> 
> As a result of this initiative for first-time buyers, a couple with a joint mortgage of up to €379,000 over 33 years, at an interest rate of 4¼ per cent, will be able to claim interest relief on the full amount of the interest on their loan. Such a couple will now gain up to €1,600 extra per year, or €133 per month, in mortgage interest relief directly credited against their mortgage bill. Single people will gain up to €800 per year, or over €66 each month. This helps existing first-time buyers who are already in their first home, as well as potential first-time buyers, without acting to inflate house prices further.


 
I reckon a sizeable big chunk of the gains in this example will be wiped out by tomorrows ECB rate rise.


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## TTV (6 Dec 2006)

Cowen has re-deemed himself in my estimation. I wonder if Bertie is upset that his developer friends wont now benefit from changes to stamp duty. Its good to see Cowen standing his own, at least now he cant be the one held responsible for bringing down the market. I wonder how long it will take before we get back to the original comments on stamp duty and how it may become an election issue for the PD's.

Does anyone expect an increase in house sales after christmas because this red herring has been removed? Or do you expect the VI's to harp on about the market waiting until the election to see if there are any moves on the duty then? Its good too that Cowen went into detail about the actual affect removing this duty will have. Hopefully it can be put to bed and we can all move on....


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## StoppedClock (6 Dec 2006)

TTV said:


> Or do you expect the VI's to harp on about the market waiting until the election to see if there are any moves on the duty then?


 
Surely the EA's must be getting bored with nothing to do, how long will they stomach the standoff before throwing in the towel and getting uber bearish just to get transactions up?


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## Panzraam (6 Dec 2006)

What are the odds on 0.5% from the ECB tomorrow?


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## Gone Fishin' (6 Dec 2006)

FF's Developer Friends have nothing to worry about because of this Budget. FF will always look after their own self-interests and will do whatever it takes to stay in power.

Cowan, and his predecessors could have pricked the property bubble, if they wanted. It's obvious they did not.

The recent census showed approx 250,000 empty houses in Ireland. What does that show? Greed and an economic imbalance. I'd love to see the value of  those houses halved.

A draconian tax on any more than 2 houses would have released enough property into the market to ease any price pressure, but FF failed to deliver.


And Bertie an Accountant? In his wildest dreams. He's as much an accountant as my dog!


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## StoppedClock (6 Dec 2006)

Panzraam said:


> What are the odds on 0.5% from the ECB tomorrow?


 
Lengthening were 100/1 ON last week but now 210/1. 

I'd say .25 is Austin**




**Done and Dusted.


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## beattie (6 Dec 2006)

StoppedClock said:


> Lengthening were 100/1 ON last week but now 210/1.
> 
> I'd say .25 is Austin**
> 
> ...


 
seemingly he has admitted that it might not be 'done and dusted' after all. Can't wait to hear him after 2moro's hike


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## whathome (6 Dec 2006)

Good news that Cowan didn't touch stamp duty but his interest relief change may have a side-effect.

Generous FTB mortgage interest allowance is good for seven years, that will discourage people from trading up. FTB's may be reluctant to trade-up and miss out on their full seven years! This will further weaken the mid-high end of the property market.


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## liteweight (6 Dec 2006)

You can still trade up, the interest relief continues whether or not you remain in the same property. The only problem is if you sell and do not purchase immediately, the clock still keeps ticking.


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## whathome (6 Dec 2006)

liteweight said:


> You can still trade up, the interest relief continues whether or not you remain in the same property. The only problem is if you sell and do not purchase immediately, the clock still keeps ticking.


 
Really? So you're saying that when a first time buyer becomes a second time buyer, they still get first time buyer allowances. Are you sure?


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## liteweight (6 Dec 2006)

Yes, there are other threads/posts on the topic. It makes sense when you think about it, people need to trade up due to family size etc. apart from wanting to. Though come to think of it, 'sense' doesn't seem to enter into it ...I've just read that children paying rent to parents can't claim rent relief or else the parents will be taxed on the money. They can pay a stranger under the rent a room scheme though!  That's the proposal anyhow. I give up!


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## whathome (6 Dec 2006)

liteweight said:


> Yes, there are other threads/posts on the topic.


 
Checked them out, you're correct - FTB interest relief continues after a move.  It should be called first seven years interest relief rather than first time buyer interest relief!


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## plaudit (6 Dec 2006)

Even so not many people move in the first few years I would suspect so by the time you get around to trading up there will only be a smallish bit of time to benefit from the relief, I can't see it being much support for the market.


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## liteweight (6 Dec 2006)

Yes and if forced to pay stamp duty on subsequent property, the interest relief gained won't go near recouping the cost.

You're right Whathome, it's confusing and I wonder how many people think they're not entitled?


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## Glenbhoy (6 Dec 2006)

whathome said:


> Good news that Cowan didn't touch stamp duty but his interest relief change may have a side-effect.
> 
> Generous FTB mortgage interest allowance is good for seven years, that will discourage people from trading up. FTB's may be reluctant to trade-up and miss out on their full seven years! This will further weaken the mid-high end of the property market.


In fairness if a paltry 1600 p.a for a couple keeps you from trading up, you obviously should not be trading up anyway.


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## phoenix_n (7 Dec 2006)

phoenix_n said:


> Whilst i can't comment on the effect on the current confusion of stamp duty on the property market i can say with reasonable certainty that the rates will not change in this budget.


 
As predicted there was no movement on Stamp Duty.

IMO, the changes in mortgage interest relief will _not _have an effect on the property market.


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## demoivre (7 Dec 2006)

phoenix_n said:


> As predicted there was no movement on Stamp Duty.



Congrats! Nice to see you get a forecast right.


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## phoenix_n (7 Dec 2006)

demoivre said:


> Congrats! Nice to see you get a forecast right.


 
 Thanks. No applause needed.

besides if i was any good at predictions i would say that watch lebanon on sunday


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## Guest126 (7 Dec 2006)

But we still do not have 2-bed apartments in Drumcondra selling for less than 200k?


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## StoppedClock (7 Dec 2006)

CapitalCCC said:


> But we still do not have 2-bed apartments in Drumcondra selling for less than 200k?


 

Yeah, what about that _other_ pediction ?  Any thoughts?


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## phoenix_n (7 Dec 2006)

CapitalCCC said:


> But we still do not have 2-bed apartments in Drumcondra selling for less than 200k?


 
Patience.

And beyond that i cannot comment or i will get banned.


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## zac (19 Dec 2006)

phoenix_n said:


> Thanks. No applause needed.
> 
> besides if i was any good at predictions i would say that watch lebanon on sunday



Nice work!

phoenix_n forecasts are getting better since he found out last month what a bid ask spread is 
Should you not be working for ESRI or something or maybe brian cowen.


phoenix_n 					   					 vbmenu_register("postmenu_324156", true);  					 				
 				 				Frequent Poster
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*Re: Iseq - Falling* 
 			 			 		 		 		 		 	Quote:
 	 	 		 			 				 					Originally Posted by *zac* http://www.askaboutmoney.com/showthread.php?p=324151#post324151 
_it cant go up every day, went from 8000 to 9000 in no time, needs a breather._


Maybe but wondering why it is across the board.

Wonder if someone could explain this to me. On davy.ie when you look at a share there is _bid price_ say 20euros, and and _ask price_ of say 21euros.

Is the bid price what someone wants to buy the share and the ask what the other party is offering....?


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## zac (19 Dec 2006)

Glenbhoy said:


> In fairness if a paltry 1600 p.a for a couple keeps you from trading up, you obviously should not be trading up anyway.



dont think mortgage interest relief within 7 yrs is effected even if you trade up.


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## zac (19 Dec 2006)

whathome said:


> Really? So you're saying that when a first time buyer becomes a second time buyer, they still get first time buyer allowances. Are you sure?




i think hes right, first time buyer status for mortgage interest relief is different that a first time buyer for stamp duty.


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## phoenix_n (19 Dec 2006)

zac said:


> Nice work!
> 
> phoenix_n forecasts are getting better since he found out last month what a bid ask spread is
> Should you not be working for ESRI or something or maybe brian cowen.


 
I cannot see how asking about 'bid spread' and forecasting are related but i figure it is a lame attempt to attack my credibility. But each to his own i guess.


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## room305 (19 Dec 2006)

phoenix_n said:


> I cannot see how asking about 'bid spread' and forecasting are related but i figure it is a lame attempt to attack my credibility. But each to his own i guess.



Because clearly only an expert in the world of the stock market investing could make predictions about the amount of taxation to be levied on houses in Ireland ...


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