Homeowners will be aware of the new Local Property Tax (LPT) which is set to be collected by Revenue from July 1. However, many homeowners still have questions around how to value their properties and how much they will have to pay.
PJ Power, Chairman of the Southern Region of the Society of Chartered Surveyors Ireland (SCSI) explains what you need to know.
Who is liable for the Local Property Tax?
In most cases the property owner of an Irish residential property will be liable for the local property tax. There are certain cases whereby the people who are renting for over 20 years or have a life-interest in a residential property will also be liable to pay the tax.
What type of properties does it apply to?
Essentially, the tax applies to all residential properties which are habitable although there are some exemptions including Properties purchased by a first time buyer between 1 January 2013 and 31 December 2013 are exempt until the end of 2016 if used as the person’s sole or main residence. Properties in unfinished housing or ‘ghost’ estates or those with high levels of pyrite are also exempt.
How do you value your property?
Simply put, the Local Property Tax is based on the market value of the property. Market value refers to the value that the property could be sold for in an arm’s length transaction on the open market on 1 May 2013. The definition in the Act refers to “chargeable value” as opposed to market value. However, in most cases they will be the same thing.
The market value is usually calculated on the basis of similar transactions and other comparable evidence and will factor in the fundamentals such as property size, location, features, access to amenities, transport links etc.
The property tax return letters sent by Revenue to homeowners contain an estimate of the tax liability. Please note that it does not reflect an accurate valuation of the property and is simply an average estimate of properties in a particular area.
The basis of the local property tax is self-assessment. This means that it is the responsibility of the individual homeowner to determine the value of their property and select the appropriate tax band.
The Revenue website contains a property tax calculator, which gives a broad estimation as to how much your Local Property Tax will amount to and there are a number of websites including the property portals and the property price register which contains property selling prices over the past two years www.propertyregister.ie
For non-standard properties or homes above €1m, a local chartered property surveyor can assist you in valuing your property accurately, which will ensure your Local Property Tax is correctly estimated.
Should you keep records of how you reached the figure?
Absolutely – you should keep records of how you reached your valuation like you would any other revenue or tax information.
How long will the value last for?
The valuation that you declare in 2013 will remain the same until the end of 2016. It is therefore important that you provide an accurate valuation to Revenue.
What should I do next?
Assess the market value of your property on 1 May 2013 in line with the Revenue guidelines, and the guidelines outlined above.
Complete your LPT Return, taking care to insert the amount of LPT payable and select a payment option.
File your LPT Return by 7 May 2013 if filing a paper Return, or by 28 May 2013 if filing your Return online.
Pay your LPT liability in accordance with the payment option indicated on your Return.
What if you can’t afford it?
For homeowners who can’t afford to pay the tax, they will be subject to either partial or full deferrals.
For a partial deferral, the charges will be deferred until the property is transferred or sold. Each deferred tax will be charged an interest rate of 4 per cent per year. The deferred tax plus interest will automatically be paid to the Revenue Commission when the property is sold.
For a full deferral, the property must the person’s sole residence. As a single person, your wage cannot exceed €15,000 per year, or €25,000 per year for a couple, during the taxable year in question.
How do you pay the Tax?
If you have received a Property PIN, you can file your Local Property Tax at www.lpt.revenue.ie. If you haven’t received a Property PIN, you can submit your details via the same website. For more information, LoCall 1890 200 255.
The Society of Chartered Surveyors Ireland and the Irish Tax Institute have published a new Local Property Tax Guide for Homeowners which is available from www.scsi.ie