THE JUNIOR FINANCE MINISTER has suggested that new products being rolled out in the country’s banks, on foot of the Keane Report into mortgage arrears, should include options for families in negative equity who can afford their mortgage repayments – but whose homes are not fit for their circumstances.
Brian Hayes told the Dáil he believed the current talks between the Central Bank and commercial lenders, which will see a range of new options being introduced for those who are keeping up repayments but whose negative equity essentially forbids them from selling.
“A bit of imagination by the banks, where people could take their debt with them, or a portion of that debt… maybe that’s the solution,” Hayes said, saying he would present any “serious proposal” to the attention of Michael Noonan.
His comments came after FG backbencher Paschal Donohoe raised the issue of tax problems surrounding couples who may wish to move into a new property to cater for their young families – but who, even if they are able to do so, are hit by the tax system.
Donohoe said he was aware of one couple who had bought an apartment for €420,000 in 2006, but which was now worth €169,000. The couple had had two children in the meantime and although they were able to meet their mortgage payments now, they were effectively barred from moving.
This was because if they were to buy a second property, and try to rent their apartment to help cover its mortgage, their first apartment would then be treated as an investment property for tax purposes.
Further, they would lose the tax relief on their original property, would forfeit their mortgage interest relief, and would also become liable for the non-principal property charge – the ‘second home tax’.
Hayes said while the situation was a reasonable one, the current state of the public finances meant it was not possible to maintain every tax credit currently operating, even though they may have worthwhile and genuine benefit.
Donohoe said any tax treatment which helped apartment dwellers move into homes, so that they have enough space to raise their children, would be targeted and should be considered.
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