As most of us are aware the local property tax is nearly here. Whether you love it or more likely loathe it, it looks like it’s here to stay for the foreseeable future.
The local property tax replaces the household charge of €100 which was imposed in 2012. In fact, if you have not already paid the household charge it is capped at €130 if you pay by 30 April 2013. If it’s still unpaid by 1 July 2013, it will increase to €200 and will be collected as part of the local property tax system.
The LPT is charged on residential property and there is an extensive list of potential persons liable for this tax as well as those who are potentially exempt from the LPT and I would draw your attention to the revenue website for a full list of such persons. Also, according to the revenue website, www.revenue.ie:
‘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’
The rate of LPT payable is 0.18% of the market value of the property up to €1 million (based on tax bands with increments of €50000 and calculated at the median point of the relevant tax bands). If the value of the property exceeds €1 million the rate is 0.25% on the excess over €1 million. For 2013 a half year LPT is payable and a full year will apply thereafter.
Example for 2013:
Market value of property: €245,000 (This falls between €200,000 and €250,000)
LPT is therefore calculated at the median point of €225,000 x 0.18% = €405 (for a full year)
As the charge for 2013 is only for half the year a charge of €202 is payable
In the coming weeks revenue will issue LPT return forms to owners of residential property. These forms will include an estimate of the LPT payable. However it should be noted that the LPT is a self assessment tax so the onus is on the taxpayer to ensure the correct amount of LPT is paid. The tax payer can use the market value supplied by revenue on the LPT return form or they can provide their own estimate of market value or they can follow the guidelines which will be provided by the revenue in the coming weeks or they can use a professional valuer. Whatever option the tax payer chooses, they must ensure that the market value used is as accurate as possible as any underpayments can be subject to interest and penalties. Revenue have advised that if you follow their guidelines honestly then they will not challenge your valuation. The valuation used for the 2013 LPT return will be used for LPT purposes until 2016 and will not need to be revised during this time even if the property is upgraded or renovated.
In certain circumstances the LPT may be deferred if it can be shown that the taxpayer is not in a position to pay the LPT. Strict conditions apply to any such deferral. The deferred LPT remains as a charge on the property however.
If you fail to pay the LPT there are a number of options through which the revenue can pursue payment including deducting it from your employment income, attachment of your bank account or referring the debt to the sheriff or solicitor for collection. Any non-payment may also result in interest and penalties being imposed on the tax payer. Non-payment could also result in late payment penalties and surcharges for self employed individuals and companies in their Income tax and Corporation tax returns. On top of this the tax payer will not qualify for a tax clearance certificate. Any unpaid LPT remains as a charge on the property and any arrears, including interest and penalties, will need to be paid before the property can be sold.
Some dates for your diary:
1 May 2013- valuation date for LPT purposes
7 May 2013- deadline for submission for LPT return if submitting paper return
28 May 2013-deadline for submission for LPT return is submitting electronic return
Further information is due to be released by revenue shortly. If you have any queries in relation to the Local Property Tax please contact us on 063 89888.
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