Local Property Tax

The purpose of this article is to set out the facts about the Local Property Tax (LPT) and make it easy for everyone to understand.

This will include:

• What the LPT is all about?
• Describe what is liable for LPT
• Will the residential property be excluded?
• The amount you need to pay
• Revenue powers
• and all the steps involved.

Background

The Local Property Tax is a tax payable on the market value of residential properties in Ireland.

It is important to first define what a residential property is. A residential property is any building or structure which is in use as, or is suitable for use as a dwelling and includes any shed, outhouse, garage or other building/structure and any yard, garden usually enjoyed with that building.

In 2013, a half year charge will apply for the LPT and from 2014 onwards, the LPT will be charged on a full-year basis. The market value of the residential property on 1 May 2013 will form the basis of the calculation of LPT for 2013, 2014, 2015, 2016. As per Revenue Guidance Notes, this value will not be affected by any repairs or improvements made to the property or any general increase in property prices, during that period.

The rate of the Local Property Tax will be 0.18% for properties up to a market value of €1 million, and 0.25% for property valued greater than €1 million. Property values will be organised into market value bands (widths of €50,000), up to €1 million.

Click on the Revenue link for the full table of value bands. http://www.revenue.ie/en/tax/lpt/liability.html

Who is Liable for Local Property Tax?

The following people are liable to pay LPT:

1. Owners of a residential property.
2. Landlords where the property is rented for less than 20 years.
3. Lessees who have an interest of 20 years or more.
4. Trustees of a trust that holds property or has the power to appoint property to persons.
5. Personal representatives of an estate of a person who was previously a liable person.
6. Local authorities or social housing organisations that own and provide social housing – the chargeable value of such properties will be deemed to fall within the first valuation band of €100,000 until 1 November 2016.
7. Persons who have a life interest in a residential property.
8. 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.
9. In any other case, the person who occupies the property on a rent-free basis and without challenge to that occupation.
10. If the residential property is sold after 1 May 2013, the owner at 1 May 2013 is liable to LPT for 2013 and the liability is payable in full at the time of the sale.
11. Joint Ownership – Only one return is required per property. Revenue can collect the tax due from any of the owners. Owners should agree who is to complete and submit the Return and pay the tax due. If a couple is separating and both persons are owners of the property then both persons will be liable to pay LPT. They should agree between them who will file the LPT return and discharge the tax liability.

Exclusions from Local Property Tax

There are a number of exclusions from LPT, which are outlined in the table below:

• Property that has been vacated by the occupant for a period of at least 12 months for reasons of long term mental or physical infirmity which has been certified by a registered medical practitioner. If the period of vacation is less than 12 months and a registered medical practitioner is satisfied that the person is unlikely to resume occupation, exclusion applies provided the property is not occupied by another person.
• Property use exclusively for the care of individuals suffering from long term mental or physical infirmity and is registered under S.4 Heath (Nursing Home) Act 1980.
• Newly constructed residential properties that have been completed but not sold, are not occupied as a dwelling, have not produced income and are held as trading stock.
• Property owned by a charity or body established by statute that is used solely or primarily to provide special needs accommodation and residential properties occupied by charities for recreational activities connected with its charitable purposes – girls’ guild, scouts etc.
• House located in unfinished housing estates (ghost estates) that are included in a list of developments drawn up by the Minister for Environment, Community and Local Government.
• Registered Nursing Homes.
• Mobile homes, vehicles or vessels.
• Certain properties certified as having significant pyritic damage; Temporary 3 year exemption and certification to standards specified by National Standards Authority of Ireland.
• Properties fully subject to commercial rates – this may apply to guesthouses and B&B’s where the property is used solely as a dwelling and commercial rates are payable on the property.
• Diplomatic properties.
• Residential properties purchased or adapted (costs of adaptation must exceed 25% of market value of property before it is adapted) for occupation by permanently and totally incapacitated individuals where an award has been made by PIAB or a court or where a trust has been specifically established for the benefit of such an individual.
• First time buyer exemption will also apply if a house is purchased jointly by a couple/civil partners/co-habitants and only one of the parties is a first time buyer.
• New and previously unused properties, purchased from a builder or developer exempt from LPT from 2013 to 2016 inclusively.

How Local Property Tax will work and Revenue Powers

The Revenue Commissioner will issue a notice to the liable person of the property, requiring an LPT return to be made on or before the return date.

An estimate of the LPT liability will accompany the LPT return form. However, this is not a valuation of the property and cannot be relied upon – it is only a guideline.

The liable person, as set out above, self-assesses the LPT liability based on the Revenue guidelines and interactive online tool (yet to go live at the time of writing this article).

A return may be prepared and delivered by a person acting under the authority of a liable person. The LPT return submitted in 2013 will be valid from 2013 to 2016 unless your circumstances change or you wish to select an alternative payment method.

A Revenue officer may make enquires and take such actions that are necessary to satisfy themselves whether a property is a relevant property, a person is a liable person, the chargeable value on a liability date and the accuracy of Local Property Tax returns.

Key Dates

March 2013:	Property owners will receive the following documentation in the post: Pre-populated LPT Return forms Estimate of LPT liability Information on valuation procedures Information on payment methods
1 May 2013:	Property valuation date and property ownership date.
7 May 2013:	LPT Return filing date for paper filers.
28 May 2013:	LPT Return filing date for electronic filers (more than one property compulsory to file online).
1 July 2013:	Commencement of phased payment / deduction at source.
21 July 2013:	Bank single Debit Authority payment deducted.

Implications of not paying and filing for Local Property Tax

Where a person is a chargeable person and has not filed an LPT return and paid the LPT or entered into an arrangement to do so on or before the income tax/corporation tax filing deadline, a surcharge will apply. The surcharge will not exceed the amount of the LPT due by the liable person where the LPT return is subsequently filed and LPT paid.

Interest charges at 8% per annum will apply to late payment of LPT plus penalties. This interest charge also applies to liable persons who enter instalment or deferral arrangement. It is important to remember that the LPT is like any other tax in Ireland and if you are not tax compliance a Tax Clearance Certificate will not be issued.

Any unpaid LPT will be collected when the property is to be sold, and can include surcharges, interest and/or penalties.

Local Property Tax: What’s next?

It is important now to take action and follow a few basic steps to complete your LPT Return:

• Determine the current market value of your property.
• Identify the valuation band and calculate the LPT due.
• Select the payment option.
• Submit the completed Return.

The long anticipated Local Property Tax has arrived and in our opinion at Irishtaxback.ie is here to stay! Our advice is if you are the liable person, get an accurate value on your property and stay compliant.

For more information contact us today or alternatively complete the form and a member of our team will contact you …