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.
It is important to note that this is a charge to the property owner and not the tenant, unless:
- you have entered into a lease in excess of 20 years, or
- 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
If you fall into one of the categories listed above you will be liable to pay LPT which fall outside the usual exemption for tenants.
Revenue will write to residential property owners enclosing an LPT Return and a detailed guide to Local Property Tax. The guide provides information on how to assess the value of your property and calculate your LPT. It also explains 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 (2020)
|1 November 2019||Liability date: if you own a residential property on 1 November 2019, you are liable to pay LPT in 2020|
|1 January 2020||Latest date if paying your LPT by cash, cheque , credit or debit card|
|21 March 2020||Single Debit authority Payment deducted|
|15 January 2020||Commencement of direct debits in equal instalments|
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).
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 Commissioners 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 LPT 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 also not deductible.
What properties are exempt from LPT?
The following properties are exempt from LPT:
- 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.
- 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.
- Properties constructed and owned by a builder or developer that remain unsold and that have not yet been used as a residence
- Properties in unfinished housing estates (called “ghost estates”)
- Properties that are certified as having a significant level of pyrite damage in accordance with regulations
- 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
- Registered Nursing Homes
- 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
- 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.
- Mobile homes, vehicles or vessels
- Properties fully subject to commercial rates
- Diplomatic properties
- Properties used by charitable bodies as residential accommodation in connection with recreational
For more information, visit www.revenue.ie
What steps are involved in paying LPT?
- Decide the current market value of your property. Property valuation guidance is available on the Revenue website. 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.
The Revenue Commissioner 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 LPT?
- Single Debit Authority.
- Debit/Credit Card.
- Cash payments
Other options include paying on a phased basis through:
- Deduction at source from your salary or pension.
- Deduction at source from certain payments received from the Department of Social Protection
What if I cant 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 is Default Collection?
The default collection for the LPT is that payment for property tax will be deducted from your wages, if 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 powers does Revenue have?
The Finance (Local Property Tax) Acts, as amended, confer the Revenue Commissioner with the power to “enter on land and inspect the relevant residential property” to assess the value of the residential property and the legislation further state that it “obliges the person occupying the property to allow the authorised person inspect the property at all reasonable times”. The legislation 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 a 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. Household Charge arrears for 2012 were 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.