Local Property Tax - A guide
A brief guide to assessment, valuations and buying and selling property in the current market
What is The Local Property Tax?
The Local Property Tax (LPT) came into effect in 2013 and is an annual charge on all residential property. Therefore it is payable on any property that is used as, or is suitable for use as, a dwelling. The tax is calculated on the market value of the property.
Who is liable to pay LPT?
The owner of the property on the liability date is liable for the payment of the tax. For LPT the liability date if the 1st November in the preceding year. For example, if you are the owner of the property on the 1st November 2015 you are the liable person for the full year of 2016.
If there is more than one owner they should make arrangements for one of them to make a return, as if not paid Revenue can collect the estimated amount due from any of the owners. Where the residential property is rented the landlord is liable for LPT unless the lease is over 20 years in duration.
How is the tax calculated?
The tax is based on the market value of a residential property on a specified valuation date. The value can then be placed in a “value band”. The first band covers all properties worth up to €100,000 and the bands then go up in multiples of €50,000 up to €1 million. If a property is valued within these bands the tax is based on the mid-point of the relevant band. If a property is valued over €1 million the tax is charged on exact valuation.
Valuation was by self-assessment in 2013 and these self-assessed valuations were to be used until the end of 2016 when a revaluation would take place. It was announced in Budget 2016 that the revaluation date for the Local Property Tax will be postponed from 1 November 2016 to 2019. The postponement of the date means that home owners will continue to pay LPT based on the original valuations that applied for 2013-2016.
The current LPT rate is an annual payment of 0.18% of the value of the property for properties valued under €1 million and 0.25% on the amount of the value over €1 million. This rate has not changed since 2013 however in 2015 a change in the legislation means that these basic rates can be increased or decreased by up to 15% by the relevant local authority. In 2015 fourteen local authorities choose to reduce the applicable rates. For 2016 only eleven authorities have chosen to do so and these are:
LPT Rate reduced by
Louth County Council
Longford County Council
Cork County Council
Kildare County Council
Monaghan County Council
Cork City Council
Clare County Council
Dublin City Council
D/L Rathdown County Council
Fingal County Council
South Dublin County Council
Therefore if your house is valued under €100,000 you will have paid €90 LPT previously at the standard rate. If the LPT rate in your local authority area is decreased by 15%, you pay €76 LPT in 2016. You do not need to do anything to receive this reduction.
The table below shows the amount payable for all valuation bands including the various reductions:
Local Authority reduced LPT Rate by
0 to 100,000
100,001 to 150,000
150,001 to 200,000
200,001 to 250,000
250,001 to 300,000
300,001 to 350,000
350,001 to 400,000
400,001 to 450,000
450,001 to 500,000
500,001 to 550,000
550,001 to 600,000
600,001 to 650,000
650,001 to 700,000
700,001 to 750,000
750,001 to 800,000
800,001 to 850,000
850,001 to 900,000
900,001 to 950,000
950,001 to 1m
Property valued at €1.2m
Property valued at €1.5m
If you are unsure of the valuation you have submitted or if you have not submitted a valuation you can review your account online. To do so you will need your PPS number, Property ID and PIN.
How do I pay LPT?
Payments are collected by Revenue. You can opt to make one single payment or you can make payments in instalments. You can sign up for Direct Debit or make annual payments by Credit Card, Cheque, Cash or EFT.
There are some limited exemptions from paying LPT. It is important to note however that there is a distinction between exempt properties and those not liable to LPT. If a property is residential and suitable for use as a dwelling but is currently unoccupied it is still liable for LPT. However, if the property is not suitable for use as a dwelling it is not liable for LPT.
There are some limited exceptions for habitable properties. Examples include:
- Properties purchased in 2013
- New and previously unused properties purchased from a builder or developer between 1 January 2013 and 31 October 2016
- Residential properties constructed and owned by a builder or developer and held as trading stock
- Certain properties situated in unfinished housing estates (“ghost estates”)
- Certain properties with pyrite damage.
- Residential properties owned by a charity or a public body
- Registered nursing homes.
- Properties vacated by their owners due to illness.
- Mobile homes, vehicles or vessels.
- Property fully subject to commercial rates.
- Diplomatic property.
- Property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individual
If you own an exempt property you must still make a return to claim an exemption.
What if I don’t do anything?
If you are a liable person and you do not submit a return the Revenue use the estimated liability, and that amount will become payable by default. Revenue will collect the amount due by:
- Mandatory deduction from your salary, wages or occupational pension
- Attachment of your bank account
- Referral of the debt to a sheriff or a solicitor for collection
- The withholding of refunds of other tax as payment against LPT due
Revenue will not issue you with a tax clearance certificate if there are arrears of LPT.
The current property market makes valuations even more difficult. This is further complicated by the fact that a valuation submitted on the valuation date in 2013 may now be significantly different to the current valuation. This means that a property on the market now may be valued well outside its LPT valuation band. In order to rectify these issues you may need to seek clearance from Revenue.
There are two types of clearance available:
1. General clearance.
There are a number of allowable thresholds and other conditions where Revenue accept that the 2013 valuation is acceptable even though a current agreed sales price is higher. This can be applied where:
a) The property is within a specific allowable valuation margin.
b) Expenditure on enhancements to a property have increased the value.
c) Sales of comparable properties.
This general clearance is for the protection of a purchaser and Revenue reserve the right look into the undervaluation.
2. Specific Revenue clearance
Revenue may furnish specific written clearance on request from a vendor where General Clearance is not available. Here an LPT 5 Form is submitted to Revenue with any proofs of the valuations available. On assessment Revenue may issue a written clearance or makes an assessment of any further amounts due.
LPT has now replaced the Household Charge. If the Household Charge was not paid for your property by the 1st January 2013 then the amount of €200 will be added to your LPT liability.
Non-Principal Private Residence Charges (Second Home Charge)
The Non-Principal Private Residence Charge was an annual charge from 2009 to 2013 in respect of residential property that was not the owner’s only or main residence in any of those years. If this has not been paid in full by 31 August 2014 there are substantial additional penalties. If a property was liable for the full period and no payments were made the total now due (as of February 2016) is €7,230. This is not incorporated into the LPT payments, and payments should be made to the relevant local authority directly. It is important to assess any potential exemptions before making a payment.
Buying or Selling Property
When buying or selling a residential property it is essential that all matters relating to LPT, the Household Charge and Non-Principal Private Residence Charges be resolved at the earliest opportunity. Issues often arise where incorrect valuations or payments have been made or returns have not been correctly filed. These issues are often further complicated where property values have changed significantly in the past few years. This can often cause delays when buying or selling such properties. There are strict Revenue guidelines on the obligations of vendors and purchasers which need to be followed in such transactions.
If you have any queries in relation to making a Local Property Tax return, your property valuation or potential exemptions please contact us on 01-6770335 or at firstname.lastname@example.org and we will be glad to assist with you query.