Posted Apr 17, 2013
The Local Property Tax (LPT) deadine for filing is due by 28th May 2013 with payment due 1st July 2013.
Local Property Tax – All you need to know.
All residential properties in the State are liable to pay the new Local Property Tax. The Tax is levied at 0.18 per cent, annually on the Market value of the property below €1 million. Any properties with a value in excess of €1 million will be subject to a further 0.25 per cent on the portion over the €1 million threshold. The Market Value is set on 1st May 2013 and will not change until the end of 2016.
Here are General FAQs to aid you in assessing your liability.
What is the Local Property Tax (LPT)? Who is liable?
The LPT will come into effect in Ireland on 1st July 2013 and will be collected by the Revenue Commissioners. The owner of the residential property is liable for this tax (in the case of a lease of over 20 years, the tenant becomes liable).
If you live in a Local Authority Home, who is liable for the tax?
The local authority, or social housing organisation, as owner, is responsible for paying the tax, not the tenant.
What will the LPT be spent on?
The revenue raised from the LPT will be used by Local Authorities in the provision of services such as public parks, libraries, open spaces and leisure amenities; planning and development; fire and emergency services; maintenance and cleaning of streets and street lighting. Local authorities can transfer funds to other local authorities as needed.
What does a residential property mean?
For LPT purposes, residential property means any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling and includes any shed, outhouse, garage or other building or structure and includes grounds of up to one acre.
When is the Market Value set?
The Market Value is set on May 1st 2013. The Revenue will have communicated by letter to all homes before then. Once this value is set, it will not change until the end of 2016.
Who decides on the Market Value of the Property?
The tax works on the basis of self-assessment. However, the Minister said that Revenue would issue guidance on how to value property. If homeowners prefer, they can get a valuation from a “competent valuer”. To allow for local discrepancies, the tax will work on the basis of market value taxable bands.
How do the taxable bands work?
The tax is calculated by using the mid-point in the band up to €1 million at a rate of .18 per cent, with the balance in excess of €1 million being taxed at .25 per cent.
How do I calculate how much tax I have to pay?
Here are two examples to help you to calculate your liability:
Under €1 million
|
Estimated value |
Band |
Mid point |
Annual Tax |
Due July 2013 half annual charge |
|
€165,000 |
€150,001 to €200,000 |
€175,000 |
€175,000 x 0.18% = €315 |
€157 |
Over €1 million
|
Estimated value |
Band stops at €1m so simply calculate 0.18% of €1m |
Plus 0.25% of balance of €700,000 |
Annual Tax |
Due July 2013 half annual charge |
|
€1.7m |
€1,800 |
€1,750 |
€3,550 |
€1,775 |
Why do I only pay half the Annual Charge in 2013?
As the new tax is only introduced in July 2013, you will only pay half the annual sum in 2013. From 2014 onwards you will be liable for the full annual charge.
How do I file my LPT return?
The LPT return can be filed by completing the Form LPT1 received from Revenue and returning it by post in the pre-printed envelope to
Bosca OP 1, PO Box 1, Luimneach
or online using the Property ID number and PIN provided on the LPT1 Form
Do I need to be registered for ROS to file online?
No go to www.revenue.ie. There is a separate login available at the bottom of the page. You will need your PPS number to log in.
How do I pay my LPT?
You can pay your bill by direct debit, credit card, debit card or a bank single debit authority. If you wish, you can have the amount deducted at source by your employer or the entity paying your occupational pension. You can have it deducted from certain payments made to you by the Department of Social Protection or the Department of Agriculture.
If I still haven’t paid the household charge what happens to that?
You are still liable for the Household charge. The 2012 charge is capped at €130 if it is paid by the end of April 2012. If it is still not paid, from July 1st, the unpaid household charge will rise to €200 and will be added to the local property tax bill.
What about the non-principal private residence (NPPR) charge on second homes?
This does apply in 2013 but not thereafter.
Who is exempt from the Local Property Tax?
If you are buying a new, or previously unused property between January 1st 2013 and 31st October 2016 you will be exempt from LPT until the end of 2016. First time buyers of second-hand property are exempt also up to 2017. Other properties that are exempt include houses in ghost estates, mobile homes and properties in other very limited cases. Anyone who has been out of their home for 12 months due to illness or infirmity is also exempt but Revenue will presume you are liable unless you return the form and claim the exemption.
What will happen if I decide not to pay?
The Revenue is responsible for compliance and the proposals are in place to seek to have it deducted at source from non-compliant tax payers. If you are self-employed, non-compliance means that the Revenue will refuse to issue you with a tax clearance certificate. If the bill is still not settled, a charge will be put on the property ensuring the property will not be sold or transferred until the bill is settled.
If I cannot afford to pay the bill now, can I defer the payment?
If you are single and your income does not exceed €15,000 or are married and your joint income does not exceed €25,000 you may be eligible for deferral. Any deferred sum will be subject to interest at 4% per annum on the original amount deferred. The property cannot be sold or transferred until the total amount of tax due is paid up to date.
Summary of Conditions for Income Related Deferral
|
Liable person (owner-occupiers only) |
To qualify for a full deferral gross income must not exceed |
To qualify for a partial (50%) deferral gross income must not exceed |
|
Single no mortgage |
€15,000 |
€25,000 |
|
Couple no mortgage |
€25,000 |
€35,000 |
|
Single with mortgage |
€15,000 + 80% of gross mortgage interest p.a. |
€25,000 + 80% of gross mortgage interest p.a. |
|
Couple with mortgage |
€25,000 + 80% of gross mortgage interest p.a. |
€35,000 + 80% of gross mortgage interest p.a. |
Will the rate remain the same or will it increase?
The Minister has promised that the rate charged will remain the same during the lifetime of this Government. However, from 2015 onwards, the Local Authorities will be allowed to adjust this “National Rate” by up to 15% of the original rate.
I jointly own my house with my spouse/partner/former spouse – who pays the tax?
Any number of people can contribute to the cost of the tax but Revenue will only deal with one individual so you will have to decide among yourselves who will pay the bill. If you are in dispute with the other owner(s), Revenue will take the full amount from whoever it catches first.
How is Revenue estimating property values?
It is using sources such as propertypriceregister.ie and their newly created online interactive valuation guide.
I live next door to a property which is bigger than mine, will I have to pay the same amount as them?
Not necessarily. Revenue will try to average out the values of similar properties in an area. If you feel you property has been over-estimated, you can submit your own valuation and the grounds for it, for Revenue to consider. If Revenue insist on the higher valuation, you must pay it but you can appeal. Beware however, if you think you have been significantly undervalued as you have to sign a legal declaration when you return your forms and it could come back to haunt you if you do not confess that you feel Revenue have been too lenient.
My house is a one off, how will Revenue be able to value mine?
One off houses poses a greater problem when it comes to placing a value on the property. You must not be afraid to come up with your own valuation. Any items or enhancements included within the 1 acre of surrounding property such as tennis courts, sheds, garages, and outbuildings should be included in the value of the home.
Will any outstanding amount of LPT in a repossession or forced sale scenario rank higher for payment than an outstanding mortgage if the sale proceeds are insufficient to fully discharge a mortgage facility?
Any outstanding LPT due becomes a charge on the property and is paid on sale or transfer of the property. The usual rule is that the priority of a charge on a property is ranked in order of the time the charge arose. The Revenue Commissioners will only have preferential creditor status over a mortgage provider where the LPT liability was due and payable before the mortgage provider advanced a loan in respect of that property. On that basis, unpaid charges for LPT should not have an effect on currently outstanding mortgages.
I am disabled. I got a grant from my local authority to adapt my property to make it suitable for my needs. These adaptions have increased the value of my property. Are there any reliefs available to me?
You may reduce the chargeable value of your property to LPT as long as you continue to reside in the property. The reduction in value is the lesser of:
The maximum grant payable under the relevant local authority scheme and
The amount of the property’s value that is attributable to the work you carried out.
I am selling my property and the purchase has asked what value I declared for LPT. Do I have to tell them?
You are obliged to tell the purchaser of your property what value you declared to Revenue for LPT purposes.
I have a granny flat attaching to my property. I have a separate entrance. Is this assessed separately from the main house?
The strict legal position is that any self-contained dwelling, such as a granny flat is treated as a separate residential property that will incur a separate LPT liability. However, Revenue recognises that certain types of dwellings such as a granny flat are difficult to value and sell on the overall market. Therefore the Revenue will give the liable person the option of valuing the granny flat as part of the overall building where the liable person in relation to both parts of the building is the same. However, where there is a different liable person in relation to the granny flat and the rest of the building, the granny flat should be valued separately for LPT purposes. This treatment also applies to other similar types of dwelling that are an integral part of the overall building such as converted garages and side extensions.
Does the value of my house have to include VAT?
Yes. If using the Property Price Register, second hand properties are VAT inclusive. New properties are shown exclusive of VAT at 13.5% therefore you have to add this figure to the value of your property when arriving at the correct figure for LPT purposes. This may push the value of your property into the next band upwards.
If I value my house at a certain figure and subsequently sell it for a larger amount but I did not knowingly undervalue it, will this be accepted by Revenue?
Revenue will accept a reasonable method of arriving at the market value of your property. In keeping with normal practice in relation to self-assessed taxes, once you engage reasonably and honestly with the self-assessment process, your self-assessment will be accepted by Revenue.
My house is located in the middle of a farm. What should I take into account when valuing my house for LPT?
Your house plus up to one acre and any associated outbuildings, sheds or other structure that is used for your own purposes and is not used in the day to day running of the farm. A garage where you keep your family car should be included but a shed where you keep your tractors and other farm machinery would not be considered for LPT purposes. Likewise, your lawn area and flower beds would be included but not a haggard farmyard or commercial glasshouse.
There are two people with the same name in the area, how can I tell who the letter is for?
Contact Revenue’s LPT Helpline 1890 200 255 giving your PPS number and they will inform you of the Property ID attached to that PPS number. The Property ID number is on your Form LPT1.