Local Property Tax Update – Revised Revenue Guidelines

Local Property Tax (LPT) came into effect in 2013 and is an annual charge on all residential property

August 24, 2017

Local Property Tax (LPT) came into effect in 2013 and is an annual charge on all residential property. The liability date for LPT is the 1st of November in any year, therefore if you are the owner of a property on the 1st of November 2017 you are liable to Revenue for the full 2018 charge.

LPT is based on the market value of residential property. Valuation was done by way of self-assessment in 2013 and these self-assessed valuations will remain in effect until the 1st of November 2019. However, in the meantime home owners will continue to pay LPT based on the original valuations that were applied in 2013.

When selling a residential property it is a reality of the current market that property values may be significantly different to the valuations submitted in 2013. This means that property prices fall well outside the LPT valuation band declared in 2013. In order to rectify this you may need to seek specific clearance from Revenue. However some situations allow for general clearance to be granted and transactions can proceed without any submission to Revenue.

As of the 1st September 2017 Revenue have issued updated Guidelines with regard to general clearance. The “Allowable Margin” for increase in the value of property has changed and there has been further general clearance conditions provided to broaden the range whereby specific clearance is no longer required. The general clearance conditions are as follows:

1.       General clearance condition 1 – sale price does not exceed €350,000

As of the 1st of September 2017 this condition has been increased from €300,000 to €350,000. Therefore if your property sale price is up to €350,000 general clearance is given for any sale.

2.       General clearance condition 2 – allowable valuation margin

This condition deals with the allowable margin within which property prices may increase outside of the valuation band declared. As of 1st September 2017 the allowable margin for price increases in Dublin City and County has moved from 50% to 80% and the allowable margin for price increases in all other Counties has moved from 25% to 50%. This means that where a sale price for a property in Dublin is not more than 80% (50% for all other Counties) above the upper limit of the valuation band declared then general clearance is granted.

In the case of properties for which the declared valuation band exceeds €1,000,000, where the sale price is not more than 80% for Dublin or 50% for all other Counties higher than the value declared then general clearance is granted.

3.       General clearance condition 3 – expenditure on enhancements to a property

Where the sale price of property exceeds the valuation band declared in 2013, any such excess must be within the margins set out in general clearance condition 2 above. However should the sale price fall above the 80% or 50% margin allowed any excess may be adjusted by the amount of verifiable expenditure on refurbishment or improvement incurred since 1 May 2013.

For the condition to apply, the vendor must be in a position to make available (if requested) receipts verifying the work undertaken and the cost of the work done.

4.       General clearance condition 4 – sales of comparable properties

This general clearance condition has not changed with the new September 2017 Guidelines however it states that general clearance may apply where a vendor can show that they based the 2013 valuation on the known and verifiable sales prices of comparable properties in the area in 2013.

In the event that none of the general clearance conditions apply then an application needs to be submitted to Revenue for specific clearance.