Budget 2013 announced that an annual Local Property Tax will come into effect from 1 July 2013.  The LPT is a tax based on the market value of residential property. It will be administered by Revenue and a half year charge will apply for 2013.  From 2014 onwards a full year charge will apply.

Who is liable?

  • Owners of residential property, including rental properties will be liable for the LPT.
  • With regard to housing provided by local authorities and social housing organisations, the local authority or housing organisation will be liable.
  • Long-term leases (more than 20 years) & life tenancies will be treated as if the occupant owns the property, as such; the occupant will be liable for the LPT.
  • Where a residential property is rented on a short-term lease (less than 20 years) the landlord is liable.
  • An individual acting as a personal representative for a deceased owner will be liable.

Exemptions:

As set out in the bill the properties which are exempt from the charge are as follows:

  • Newly constructed, unoccupied and unsold residential properties;
  • Where ownership is vested in a public body or an approved charitable body and used to provide accommodation to people with special housing needs;
  • Where a principal private residence is unoccupied due to long term mental or physical infirmity of the owner;
  • Mobile home, vehicle or vessel;
  • Property fully subject to commercial rates;
  • Houses in certain unfinished developments;
  • Residential properties enjoying protection in other legislation – e.g. diplomatic property.

Operation of LPT:

Revenue is developing a register of residential properties using information from various sources including Household charge data, Non-principal Private Residence date and Residential Tenancies Board data.  Once the LPT legislation is enacted Revenue will have the power to obtain information from other bodies such as utility service providers to further enhance their database.

Owners will be contacted in March 2013 and will have until 7 May 2013 to send back the completed LPT return form.  If filing electronically the due date for the return is extended to 28 May 2013.  The return submitted in 2013 is valid for a period of three years unless circumstances change.

Rates:

The rate of LPT will depend on the market value of the property.  The initial band will be €0 – €100,000.  Thereafter bands of €50,000 width will apply up to €1 million.  The tax liability will be calculated by applying the tax rate to the mid-point of the band.  No band will apply where houses are valued at over €1 million.

The rate of LPT will be 0.18% for properties up to a market value of €1 million and 0.25% thereafter.

Example

Market value                     €240,000

Value band                         €200,000 – €250,000

Midpoint                             €225,000

LPT due                               €225,000 @ 0.18% = €405 for full year

For 2013 – there will be a half year charge of €202 and from 2014 onwards the full €405 will be due.

Payment:

Payment can be made in a number of different ways; however in certain circumstances where LPT is not paid by the due date Revenue have the power to direct that the tax be withheld from salary, certain social welfare payments and farm payments.  Revenue will notify taxpayers if they intend to do this.

Additionally there will be a link between income/corporation tax returns and the LPT.  Late property tax returns will give rise to a surcharge on income/corporation tax returns.  This surcharge will be capped at the amount of LPT due.

Interest on unpaid LPT will be 8% per annum.

Deferrals:

There will be a system for deferring the payment of the LPT for owner-occupiers under the following circumstances:

  • Where the gross income does not exceed €15,000 (single) and €25,000 (couple).
  • Where gross income less 80% of mortgage interest falls below €15,000/€25,000 a deferral option will be available up to the end of 2017.
  • Where the income for an owner-occupier is €10,000 above the income limit of €15,000/€25,000 a deferral will be allowed of up to 50% of the LPT liability.

It should be noted that interest will be charged on deferred amounts at a rate of 4% per annum.  The deferred amount, including any interest will be a charge on the property and will have to be discharged on the sale/transfer of the property.