Local Property Tax (LPT) is an annual self-assessed tax charged on the current market value of all residential properties in the State from 1 July 2013. This is a charge to the property owner not the tenant, unless you have entered into a lease in excess of 20 years or if you have an exclusive right of residence in a property for life or for a period of 20 years or more or hold a life interest in a property you will be liable to pay local property tax.
Revenue will write to residential property owners enclosing an LPT Return and a detailed guide to Local Property Tax. The guide is to provide information on how to assess the value of your property and calculate your LPT on your property. It will also explain your payment options and how to make your return to the revenue commissioners. If you have not received a letter from the Revenue this doesn’t mean you are one of the lucky ones and don’t have to pay. You must contact the Revenue. There is no avoiding the Local Property Tax unless you qualify for an exemption. If you have not received a letter and do not pay this tax it will be spotted later on down the line, when a property is sold, transferred or inherited.
Important dates for payment of LPT 2014
|1 November 2013||Liability date: if you own a residential property on 1 November 2013, you are liable to pay LPT in 2014|
|1 January 2014||Due date if paying your LPT by cash|
|21 March 2014||Single Debit authority Payment deducted|
|15 July 2014||Commencement of direct debits in equal instalments from July 2013 – 31 December 2013|
WHAT DOES “RESIDENTIAL PROPERTY” MEAN FOR LPT PURPOSES?
A “Residential Property” is any building (or part of a building) which is used as, or is suitable for use as, a residence and includes any yard, gardens, driveway or other land associated with the property up to one acre in size. It also includes any other buildings or structures that belong with the residence such as garages and sheds.
WHO IS LIABLE TO PAY LPT?
If you own a residential property in the State, including a rental property, you are liable to pay the Local Property Tax (LPT).Revenue have set out that the following categories of persons are liable to pay LPT:
- Owners of Irish residential property, this includes people who live abroad and own Irish Residential property. If there more than one owner of the property, the owners will need to agree who will make the relevant LPT Return and discharge the tax. If it is not paid, the Revenue can proceed to collect the tax due from any of the owners, which includes the default collection method as set out below.
- Landlords who own property which is rented under a short-term lease (for less than 20 years).
- Local authorities or social housing organisations that own and provide social housing.
- Lessees who hold long-term leases of residential property (for 20 years or more).
- Holders of a life-interest in a residential property.
- Persons with a long-term right of residence (for life or for 20 years or more) that entitles them to exclude any other person from the property.
- Personal representatives of a deceased owner (e.g. executor/administrator of an estate).
- Trustees, where a property is held in a trust.
- Where none of the above categories of liable person applies, the person who occupies, or receives rent from, the property is the liable person.
The Revenue have stated that LPT is a self-assessed tax, and if you are liable to pay you must complete and submit the Return, calculate the liability and pay any tax due.
Property owners should note that the LPT tax is not deductible from rental income when calculating profit for income tax purposes at the end of the year. The NPPR and the household charge are not deductible.
When must I own the property to be liable to pay LPT?
The rule is different for 2013, if you own a residential property on 1 May 2013, you are liable to LPT for 2013. Therefore if you sell your property after 1 May 2013 you are liable to LPT for 2013 and the liability is payable in full for the year at the time of the sale. For each year after 2013 the date will be the 1 November in the preceding year. Exemption: If you have purchased a new and unused property since 1 January 2013 or if you are a first-time buyer who purchased a property since 1 January 2013 as your sole or main residence an exemption from LPT applies for that year. You will still be required to submit a return to the revenue.
WHAT STEPS ARE INVOLVED IN PAYING LPT?
- Decide the current market value of your property. Property valuation guidance is available on the revenue website on www.revenue.ie .These are estimates only and are based on the average values in your area. The value of your property could be lower or higher. Valuations can be difficult particularly in rural areas.
- Identify the valuation band and calculate the LPT due. Property valuation guidance is available on the revenue website on www.revenue.ie .These are estimates only and are based on the average values in your area. The value of your property could be lower or higher. Valuations can be difficult particularly in rural areas.
- Select your preferred payment option or check to see if you qualify for a deferral or exemption.
- Submit the completed Return.
Revenue have confirmed that they will write to residential property owners enclosing an LPT Return and a detailed guide to Local Property Tax. If you do not receive a Return and you are liable for LPT you must still make a return.
HOW CAN I PAY THE LPT?
- Single Debit Authority.
- *Debit/Credit Card.
- *Cash payments
Other options include to pay on a phased basis from 1 July 2013 by:
- Deduction at source from your salary or pension.
- Deduction at source from certain payments received from the Department of Social Protection
IF I CAN’T AFFORD TO PAY?
A deferral arrangements is the only option available where you are unable to pay, and certain conditions must be met in order to be able to avail of the deferral option. But you should be aware that the deferral will carry an interest rate of 4%. Which can add up to be a significant amount.
WHAT PROPERTIES ARE EXEMPT FROM LPT?
List set out in the www.revenue.ie website
A. New and unused properties purchased from a builder or developer between 1 January 2013 and 31 October 2016 are exempt until the end of 2016.
B. Properties purchased by a first time buyer between 1 January 2013 and 31 December 2013 are exempt until the end of 2016 if used as the person’s sole or main residence.
C. Properties constructed and owned by a builder or developer that remain unsold and that have not yet been used as a residence.
D. Properties in unfinished housing estates (called “ghost estates”)
E. Properties that are certified as having a significant level of pyrite damage in accordance with regulations
F. Properties owned by a charity or a public body and used to provide “special needs” accommodation and support to people e.g. sheltered housing for the elderly and the disabled.
G. Registered Nursing Homes.
H. A property previously occupied by a person as his or her sole or main residence that has been vacated by the person for 12 months or more due to long term mental or physical infirmity.
I. A residential property which has been built or adapted to make it suitable for a permanently and totally incapacitated individual which the property is their sole or main residence. There are certain condition that attach to this exemption. Where adaptations have been made to a property, the exemption will only apply where the cost of the works exceeds 25% of the market value of the property (before any works commenced). This exemption does not attach to the property, if the permanently and totally incapacitated individual no longer resides in the property or the property has been sold the exemption doesn’t apply. Also the act provide for a reduction in the market value of a residential property that has been adapted where the adaption has been grant-aided or approved for grant aid, by a local authority. This relief can only apply where the adaptation increases the market value of the property.
J. Mobile homes, vehicles or vessels.
K. Properties fully subject to commercial rates.
L. Diplomatic properties.
M. Properties used by charitable bodies as residential accommodation in connection with recreational
WHAT IS THE DEFAULT COLLECTION?
The default collection for the LPT is that the payment for property tax will be deducted from your wages, if of course you are employed. As set out at the start of this article the Revenue have written residential property owners enclosing an LPT Return and a detailed guide to Local Property Tax. If you receive this form and are not a property owner I would advise against ignoring this letter. If you ignore it Revenue will look for the amount and set out in the letter and this may involve deducting the amount from your wages. Contact the Revenue if you receive a letter and are not a property owner.
WHAT FURTHER RIGHTS DO REVENUE HAVE?
The Act states that the Revenue will have the power to “enter on land and inspect the relevant residential property” to assess the value of the residential property and the act further states that it “obliges the person occupying the property to allow the authorised person inspect the property at all reasonable times”. The act imposes a maximum fine of €3,000 on a residential property owner who “fails to submit a return or fails to include all required information” and an property owner who “knowingly makes a false statement” to reduce the amount of LPT payable will also face a maximum fine of €3,000.
The HouseHOLD charge and LPT
The LPT replaces the Household Charge which was introduced in 2012. If you did not pay the Household charge this can still be collected by the Revenue Commissioners. The arrears due of the Household Charge for 2012 will be capped at €130 if paid by 30 April 2013. Where the Household Charge for 2012 has not been paid by 1 July 2013 the amount due will be increased €200 and will be included as part of the LPT liability in respect of the property.