Local Property Tax

The long awaited property tax was finally introduced into law in March 2013. Here we take a look at the essential information you will need to know to pay the right amount of property tax on your home and on time.

Who has to pay the property tax?

In short, anyone who owns a property on the 1^st May 2013 will be required to submit a return.  The tax is payable regardless of where you now live so if for example you are renting out a home you own and you are living abroad or in rental accommodation yourself, you must still pay the tax. 

If a property is jointly owned only one of the owners needs to submit a return.  However if the return is not submitted Revenue can enforcement proceedings against all the joint owners.

When do I have to pay by?

The first step is to make a return to the Revenue Commisioners and this must be done by the 7^th May 2013.  This deadline can be extended to the 28^th May 2013 if you file online. You do not have to pay on this date however, the deadline for payment is the 31^st July 2013. You can also arrange to pay your bill in instalments in which case the first instalment will fall due on the 15^th July 2013. You can also request Revenue to deduct the instalments directly from your wages.  Revenue will then contact your employer informing them of how much to deduct.

 

How much do I have to pay?

Your annual liability will depend on which valuation band your property falls into.  Our table below gives full details of the valuation bands. Once you have found your valuation band you can calculate your bill by taking the mid point of the band and multiplying by  0.18%.

Example

A property is valued at €430,000.  This falls into valuation band 08.  The midpoint of this band is €425,000.  The tax liability is €425,000 * 0.18% = €765. 

For 2013 only 50% of the charge is payable (I.e. €382 in the above example).

Properties over €1million

Where a property is valued at more than €1 million the excess above €1 million is liable to an increased rate of 0.25%.  

What happens if I don’t pay?

Where a return is not submitted Revenue will commence enforcement proceedings against the owner of the property.  This can include the following measures:

• Mandatory deduction from wages or certain government payments such as payments
• Attachment to bank accounts
• Referral of the deb to a sheriff or a solicitor for collection
• Withholding of any tax refund due

In addition, if you fail to submit a return you will not be able to get a tax clearance certificate from Revenue.

It is important to note that the LPT does not replace the NPPR charge for 2013.  This charge will still be payable by the 30^th June 2013 on properties which were non principal private residences on the 31^st March 2013.

What if I can’t afford to pay now?

The liability can be deferred where your gross income is not likely to exceed €15,000 in the year (€25,000 for a couple).  These thresholds can be increased by 80% of the interest liability on any mortgage outstanding on the property.  This increase is only available to owners who reside in the property (i.e. does not apply to rental properties).

It’s important to note that this is not an exemption from the tax liability.  Instead the tax liability is deferred until the property is sold or transferred at which point the full amount deferred becomes payable.

A deferral of 50% of the liability can be claimed where your income is not likely to exceed €25,000 (€35,000 for a couple).  Owners-occupiers can also increase these thresholds by 80% of the interest on any mortgage outstanding on the property.

Gross income is defined as all income before any allowances or reliefs and including tax exempt income such as Social Welfare payments but excluding child benefit.

How do I value my property?

The LPT is a self assessed tax which means that it is up to you to value your own property.  The value to be used is the market value of the property as at the 1^st May 2013.  This value will be used for calculating the tax for 2013, 2014, 2015 & 2016.

Revenue have published guidance on their website (www.revenue.ie) on how to value a property.  This is based on the type of property, age of property and the location of the property.  You do not have to accept this valuation and can work out your own valuation.  If Revenue believe the property is undervalued they can raise an assessment on a higher valuation.  You can appeal this to the Appeal Commissioners if you are unhappy with Revenue’s valuation.

Exemptions

The following properties are exempt from the LPT charge:

• New properties purchased after 1^st January 2013
• Properties purchased by first time buyers after 1^st January 2013
• Unused properties owned by a builder or developer
• Properties in unfinished house estates (as specified by Minister for Environment, Community & Local Government)
• Properties certified as having pyritic damage
• Certain properties owned by charities or public bodies
• Registered nursing homes
• Residential property vacated by owner due to physical or mental infirmity
• Mobile homes, vehicles or vessels
• Properties which are fully subject to commercial rates
• Diplomatic properties

What are the next steps?

1. You should receive correspondence from Revenue in the next few weeks containing the following information:

• Paper return – this will also include login details for logging into online system
• Revenue guide to the LPT
• Revenue estimate of liability

2. As set out above all owners of residential properties on the 1^st May 2013 must submit a return.
3. Return should be submitted by 7^th May 2013 or by 28^th May 2013 if filed online
4. Begin instalment payments on 15^th July 2013 or make lump sum payment on 21^st July 2013
    

Valuation Band Table

Valuation Band Number	Valuation Range (€)	Range Midpoint (€)	Full year charge (€)	Half year charge for 2013 (€)
01	0 – 100,000	50,000	90	45
02	100,001 – 150,000	125,000	225	112
03	150,001 – 200,000	175,000	315	157
04	200,001 – 250,000	225,000	405	202
05	250,001 – 300,000	275,000	495	247
06	300,001 – 350,000	325,000	585	292
07	350,001 – 400,000	375,000	675	337
08	400,001 – 450,000	425,000	765	382
09	450,001 – 500,000	475,000	855	427
10	500,001 – 550,000	525,000	945	472
11	550,001 – 600,000	575,000	1,035	517
12	600,001 – 650,000	625,000	1,125	562
13	650,001 – 700,000	675,000	1,215	607
14	700,001 – 750,000	725,000	1,305	652
15	750,001 – 800,000	775,000	1,395	697
16	800,001 – 850,000	825,000	1,485	742
17	850,001 – 900,000	875,000	1,575	787
18	900,001 – 950,000	925,000	1,665	832
19	950,001 – 1,000,000	975,000	1,755	877
20	> 1,000,000 – 0.18% on first 1 million and 0.25% on excess

?Interestingly, a person who has an interest or tenancy in a property of more than 20 years is regarded as an owner for the purposes of this tax. So, if you have been renting the same property for over 20 years you will need to pay the tax.

Date published 11 Mar 2013

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.