Local Property Tax Update
A brief guide to assessment and the changes to be introduced by the Finance (Local Property Tax) (Amendment) Bill 2021
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.
There are 20 different LPT bands to cover increasing property values. For more details on how it is assessed and who is liable to pay you can see our previous article on the Local Property Tax by clicking here
What are the proposed changes?
While the full text of the Bill has not yet been published the heads of the Bill released provides an overview of the measures to be introduced. There are two primary areas of change;
A. Properties will be revalued.
Since its introduction the valuation date for properties being assessed for LPT was the 1st May 2013. This was due to be updated on an ongoing basis but for various reasons has not yet occurred until now.
The new amendment to the Act will mean properties being revalued for LPT on the 1st November 2021 and thereafter to be reviewed every four years. Given the general trend of increased property prices since 2013 most properties will see an increased valuation.
B. Some exemptions will end and others may change in scope.
LPT will now apply to first-time buyers who purchased their property during 2013, to all new homes bought since 2013 and homes in defined “ghost estates”. These categories were previously exempt from the charge.
The exemption for defined pyrite damaged properties will be phased out but it is envisaged that a new exemption will be created for defined homes that are eligible for the ‘Defective Concrete Blocks Grant Scheme’ that is Mica affected homes.
Under the current scheme homes vacated due to illness may be exempt from LPT. However this exemption required that the property not be occupied by another person. The non-occupation requirement is due to be removed. This would allow owners to rent the properties or have a person reside there for security or maintenance purposes.
Will I have to pay more tax?
Although property prices will generally be increasing the bands used to calculate what you pay are also being adjusted to offset this in terms of the tax to be paid as seen in the table below. There will still be 20 Bands but the widening of the bands should mean that many homes will pay the same amount of LPT as the bands are adjusted to match the increasing valuations.
Department of Finance officials estimate that;
- 11% of homes will see a decrease in LPT;
- 53% of homes will see no change in the LPT applied;
- 33% of homes will see an increase of up to €100 by moving up one band;
- 3% of homes will see a larger increase of up to €200 by moving up two bands.
Of course, those previously exempt will now face paying LPT for the first time.
Buying or Selling Property
When buying or selling a residential property it is essential that all matters relating to LPT (and Household Charge and Non-Principal Private Residence Charges) should be resolved at the earliest opportunity. If you are considering buying or selling in the second half of 2021 or in 2022, delays and issues may arise with the change in the legislation if the LPT is not filed correctly.
The owner as of 1st November 2020 is liable to pay the 2021 charge at the current rate and the owner as of 1st November 2021 will have to file the adjusted valuation for 2022. A sale may not close on time where incorrect valuations or payments have been filed incorrectly. 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.