Local Property Tax

Residential property tax came thirty years ago, was very unpopular and went again twenty years ago. The LPT is imminent, apparently because the troika is insisting on it. Pending its arrival this year, we have had the 200 annual NPPR levy (which again falls due in 2013 but is gone thereafter), the 90 PRTB registration fee every time you have a change of tenant (still with us) and the 100 household charge (an “interim measure” now gone but converted into LPT if not paid by 1 July next). Oh, and don’t forget the septic tank levy or the stamp duty you paid when you bought your property! 

MAIN POINTS TO NOTE ON THE LPT

The rate is 0.18% for residential properties valued less than 1m and 0.25% on any excess over 1m. Broadly speaking, an “owner” is liable to pay the LPT based on an ownership date, which is 1 May for 2013 (note it is 31 March for the NPPR). The 2013 liability is based on a half-year only. It is payable by all owners of Irish residential properties (unless an exemption applies – see below); that means overseas and company owners of Irish residential properties are liable to the LPT not just Irish individuals.

 Revenue have written out to property owners to provide their “estimate” of the property value, but have stressed that the estimate is not a valuation – it is up to the property owner to “self-assess” and choose the correct valuation band. The bands are up to 100,000 and then 50,000 increments up to 1 million; the mid-point in the band is chosen (i.e. LPT is 0.18% of 225,000 if your house is in the 200,000 to 250,000 band). The valuation chosen, assuming correct, is valid for four years. This Revenue correspondence should also include the LPT return (a two-page document) and Revenue LPT guidelines. A paper return is due to be filed by 7 May 2013, with online filers getting an extension to 28 May. Online filing is mandatory if you are already subject to the mandatory tax e-filing provisions or if you own more than one property. Payment is due for 2013 in July with a periodic direct debit payment option possible; that includes deduction at source from salary or pension or certain payments from two Government departments – Social Protection and Agriculture. Full or partial deferral is possible (there are seven possible scenarios where you can claim this by showing inability to pay) but interest applies to late payment. Note also that the 2014 payment won’t be far behind as it falls due in January 2014. You are obliged to file at least a month before the LPT is due – i.e. unlike many of the taxes already administered by Revenue, the pay and file date are not the same. There are thirteen possible categories for exemption, such as “trading stock” of construction companies that have not been rented and certain properties in some “ghost estates”, properties owned by a charity and used for “special needs accommodation”, mobile homes, diplomatic properties and properties fully subject to commercial rates. Presumably with a view to getting the residential market going again, first-time buyers or buyers of “trading stock” from developers are also exempt from LPT for four years. Self-employed taxpayers should be wary of failing to meet their LPT obligations. Sanctions include a potential surcharge as the relevant tax return is deemed to be filed late, which could lead to withholding of tax refunds or inability to get a tax clearance certificate. Furthermore, failure to pay LPT means it remains as a charge on the property and it cannot be sold unless the LPT liability is settled. Revenue have been active in the media, highlighting their mandate to collect LPT and also flagging that they are looking at various sources of data to ensure the register of residential properties they use as the basis for writing out to owners is as complete as possible. Of course, what is implicit in this is that the LPT will highlight owners who potentially have arrears of other taxes (e.g. NPPR or household charge or, if it is a rental property, undeclared rental income).

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