I wist to thank Mr Imbert for taking time out of your busy schedule to respond to my letter. I appreciate it. While I don't want to get into a weekly back and forth of letters, I feel I need to clarify my position.
I was not questioning the way in which the tax is calculated, as you say the law states that it is based on the rental value of properties and not the capital value. I have no problem with the three per cent either.
My concern lies with when the Rental Value of the property is determined and how often it is reassessed.
Traditionally, as far as I am aware, rental values are roughly five per cent of the property value, which is where it ties in with the Capital Value of the property. You can consult with real estate agents to see if this is in fact correct and adjust where necessary.
So if the rental value is determined at the time the property changes hands and is deemed to be five per cent of the capital value, then the rental value is within the law as written. However, laws can be amended if necessary to specify when or how often the value is determined. Currently I don't believe it does and if it does then it has not been adhered to.
I'll try to be brief. A person's greatest ambition is to own his own house, likely his biggest single investment.The very essence of the word investment implies that it is expected to increase in value. He takes on a mortgage and makes sacrifices because he knows that at the end of it all, the home is his.
No one can take that away from him. He adds on a room or two as his family grows so that his family can be comfortable. Eventually his mortgage is fully paid up. He now owns his property.He is getting on in age and has retired. He has set aside for his retirement and is now on a fixed income with little or no way of increasing it.
Because the law does not specify when or how often the rental value of the property is to be assessed, he is left vulnerable at a time when he can do nothing.
He has worked all his life to own his property, preparing it for his retirement and making his home comfortable, adding on an annex for his children to start out before being able to afford their own home. This annex could then house a live-in assistant when he is no longer able to care for himself effectively, but at least he can still live in his own home and eventually die in comfort and with dignity.
By preparing for his future, providing his children with something they can inherit to give them a head start in life, he may very well be orchestrating his own demise. If the tax is fixed for as long as you own the property then no one has to be worried. Think of it in the same way as Value Added Tax, a person buys a property, adds value and when it is sold the property tax is increased based on the added value. I'm talking about an owner-occupied property, rental properties will generate taxes through property tax, Green Fund levy, business levy and income tax.
The last assessment was done sometime in the 1960s. What will the new assessment be based on, a survey that was done around 2007? The economy was different then. Would a property owner be wrong to challenge an assessment in court during recessionary times since the rental value would fall? Can the courts handle a barrage of challenges? How often will there be assessments?
A simple amendment to the law that specifies when the rental value will be determined and how long it would hold is all that is needed.
Bernard Quesnel,
Maraval