Local Property Tax
An annual Local Property Tax (LPT) charged on all residential properties in the State will come into effect from July 1st 2013. It will be administered by the Revenue Commissioners and a half-year charge will apply in 2013. The tax covers all residential property in the State and the owner of the property is the person liable, including the owners of properties rented out to tenants and the Legal Personal Representatives of persons who owned a property, once a Grant has issued to the estate.
HOW IS THE TAX ASSESSED?
The LPT will work on the basis of self-assessment. The Revenue will issue guidance notes on how to value property. If homeowners prefer, they can also get a valuation from a “competent valuer”. To allow for local discrepancies, the tax will work on the basis of market value taxable bands. The value is set on 1st May, 2013 next. The Revenue will be in communication with all home owners before then. Once set, the valuation will stay unchanged until the end of 2016. The first band will cover all properties worth up to €100,000. Thereafter bands will ascend in multiples of €50,000 – i.e. €100,001 - €150,000, €150,001 - €200,000 and so on up to €1 million. The tax will be assessed at the mid-point in the band up to €1 million. For properties over €1 million, you are taxed at 0.18 per cent of €1 million, with the balance taxed at 0.25 per cent. By way of example if your home valued at €295,000, it will fall in the €250,001-€300,000 band. The mid-point of that band is €275,000. Multiplying that figure by the tax rate 0.18 per cent, €495. That sum will be your local property tax bill for a full year and will remain unchanged until the end of 2016. As the LPT is only coming into effect in July, 2013 half the annual sum is payable, €248. For property valued at more than €1 million bands do not apply. Instead you calculate 0.18 per cent of the first €1 million, which is €1,800, and then add 0.25 per cent of the balance.
HOW IS THE TAX PAYABLE?
The LPT may be paid by direct debit instalments, credit card, debit card or a bank single debit authority. You can also arrange to have the sum deducted at source by your employer, or the entity paying your occupational pension. Deduction at source will also be permitted for certain payments from the Department of Social Protection or the Department of Agriculture.
WHAT ABOUT THE HOUSEHOLD CHARGE?
Any arrears of Household Charge (HC) will continue to apply although the LPT has replaced the Household Charge. The HC for 2012 will be capped at €130 if paid by the end of this April. From July 1st, the unpaid HC will rise to €200 and will be added to the LPT bill.
AND THE NPPR CHARGE?
The Non Principal Private Residence (NPPR) Charge will continue to apply for the year 2013
ARE THERE ANY EXEMPTIONS?
People buying new or previously unused properties between now and the end of 2016 will be exempt until the end of 2016. First-time buyers of second-hand property will also be exempt, as will houses in ghost estates, mobile homes and properties in other very limited cases all until the end of 2016.
WHO WILL ENFORCE COMPLIANCE?
The Revenue is responsible for compliance and if necessary that may deduct unpaid LPT at source from non-compliant taxpayers. For self-employed people, failure to pay may see the Revenue refusing to issue a tax clearance certificate. If the LPT is still unpaid, a charge will be put on the relevant property, ensuring it cannot be sold or transferred to new owners without being settled.
IS DEFFERAL PERMITTED?
There will be provision for voluntary deferral for owner-occupiers unable to pay. It will apply only where gross income does not exceed €15,000 for a single person and €25,000 for a couple. People with income within €10,000 of these limits will be able to defer part of the bill. Those in mortgage distress may also be eligible for deferral. Interest on deferred sums will be at 4 per cent annually, but not compounded. The deferred amount will be a charge on the property payable ahead of any sale or transfer.
For further information contact Colin Mulhall Tax Partner – firstname.lastname@example.org or phone 023 8843400