If you own a residential property in Ireland you will be liable for payment of the Local Property Tax (LPT) which came into effect in 2013.
Local Property Tax (LPT) was introduced by the Finance (Local Property Tax) Act 2012. Under the Act all residential property in the state is liable to pay the tax, with very few exceptions, these include first time buyers in 2013, property where the owner is in a Nursing Home for over twelve months and property owned by charities. New and unused residential properties will be excluded from LPT if purchased between the 1st January, 2013 and the 31st October, 2016. Properties in unfinished estates as listed by the Minister for the Environment are also excluded.
Valuation of Property
The valuation date is the 1st May, 2013 on which the property must be valued. This valuation then applies for the years 2013 to 2016. The next valuation date is the 1st November, 2016 and that valuation with apply for the subsequent three years.
Rate of Tax
The rate of LPT is 0.18% on the value of the residential property (up to one million euros).
A rate of 0.25% will apply to properties exceeding one million euros.
The Act provides for nineteen valuation bands. The first band is from €0.00 to €100,000.00 and each subsequent band is for each €50,000.00 increase up to one million euro. The charge for tax is applied to the mid point of each valuation band.
Example: if a house is worth €190,000.00, the valuation band of €150,000.00 to €200,000.00 applies and tax is therefore charged at the mid point of the band i.e. 0.18% of €175,000.00. The tax therefore is €315.00. For 2013 50% of the tax liability is due i.e. €157.00 but from 2014 to 2016 the LPT will be €315.00.
LPT is a self assessment tax and each homeowner should have made a return prior to June, 2013. If a return has not been made, the tax payer can be considered to be non- compliant of all of their tax liabilities and this can have serious repercussions for example if a tax clearance certificate is required.
Revenue has been given wide powers of collection of the LPT including deducting the tax from earnings at source.
Late payment of tax will be subject to interest on the outstanding tax at 8% per annum. There are also additional penalties subject to a maximum of €3,000.00.
Selling Charge on Property
LPT remains a charge on property and each subsequent owner becomes liable for any unpaid LPT on the property and it is therefore important for a purchaser to obtain proof of payment of the LPT.
The household Charge is a one off charge for the year 2012 at a rate of €100.00 charge per property. Any undischarged Household Charge can be paid to the Local Authority in the sum of €130.00 up to the 1st July, 2013. After the 1st July, 2013 the charge increases to €200.00 and is then treated as a Local Property Tax and is payable to the Revenue Commissioners, and not the Local Authority.
The annual charge of €200.00 for non-principal private residences is due for the years 2009 to 2013 inclusive and will be abolished from the 1st January, 2014. Any unpaid NPPR tax remains as a charge on the property and it is important for purchasers to ensure that there are no arrears of NPPR on second hand properties.
By David Williams