More than 10,000 households are to pay property tax for the first time on the back of reforms to be announced in the New Year.

Taoiseach Leo Varadkar has signalled that anyone who bought a home in 2013 will have to start paying the Local Property Tax from 2020.

It has long been expected that this cohort of people would be brought into the property tax net as part of reforms being devised by Finance Minister Paschal Donohoe and Housing Minister Eoghan Murphy.

While stopping short of saying the exemption will definitely end, Mr Varadkar said: “That is not fair because they benefit from the same local services as everyone else.

“That was done for a particular reason in 2013 to encourage increased housing supply but that is now going in the right direction. We need to consider that and it will bring in extra money for local authorities.”

The move will give the Government more room to limit increases for other households. The tax is currently charged based on a the value of a home in May 2013. A fresh valuation of properties is due to kick in next November.

This dramatic increase in property prices over the past five years means that households should be facing substantially higher bills for 2020. However, Mr Varadkar promised this will not be the case.

“We are still doing some work on that. The main thing we want to avoid is anyone facing a significant increase in their property tax because we just don’t want that to happen.

“I know people feel that because house prices have gone up a lot since in the last four or five years that it means their property tax will go up by that amount. We are going to make sure that doesn’t happen,” the Taoiseach said.

The average annual charge ranges from more than €500 in some parts of Dublin to €130 in Leitrim.

A system is being worked out to ensure that the amount of revenue collected by local authorities from property tax remains roughly static after properties nationwide are revalued.

The reforms will also seek to find ways of keeping the money paid by a household for services in their area.

Each council is permitted to retain 80pc of the charge, while 20pc is earmarked for distribution to less well resourced local authorities.

“We think there is a better way to do that,” Mr Varadkar said.

“There would still need to be an equalisation fund to make sure those less well-off counties, particularly those down the western seaboard, don’t lose out. But I think people would prefer to see the actual tax they pay going to their own local authority.”

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