The Department of Finance has denied that the money collected through the property tax is going to pay off the bailout debts.

It was reported today that the money collected so far would be going to repay Irish bailout loans and to international bondholders.

But the Department says those reports are not accurate and that the money was already set aside to local authorities.

Last week Finance Minister Michael Noonan told Independent TD Patrick Nulty that the property tax receipts for 2013 would be used to reduce the deficit. This morning it was reported that this meant the money was going towards repaying Irish loans from the EU and IMF.

But this afternoon the Department of Finance says that is simply not the case.

It says money in the Budget was set aside for local councils at the start of the year to allow for the fact that the tax only kicked in in July. Around €175 million has been collected in the tax so far, with another €75 million expected by the end of the year.

The Department says that from next year 80% of the tax will be set aside for spending in the area it was collected.

That means councils will be given €400 million to spend as they see fit.