WHAT IS IT?
The Local Property Tax or LPT is a self assessed tax payable by an individual on the market value of his/her “residential property or properties” located in Ireland.
WHAT DOES THAT MEAN?
It means the LPT is a self assessed tax. You are responsible for valuing your own property, filing your tax return and making the relevant payment.
WHAT’S MEANT BY “Residential Property?”
A “residential property” is any building (or part of a building) which is used or is suitable for use as a residence. It includes the driveway, yard, garden, garages, sheds and any other land associated with the property up to one acre in area.
HOW IS THE PROPERTY VALUED?
Because the LPT is a self assessed tax the property owner must decide on the market value of the property. Once the market valuation has been made it will hold for LPT purposes until the end of 2016 regardless of any improvements or renovations to the property or indeed any changes to the property market.
Revenue will not be valuing individual properties. Instead they will provide guidance to assist the property owners in valuing their own property. The LPT information guide uses the following resources as suggestions on how to honestly value your property:
If in doubt, it is advisable to get a valuation from an independent Auctioneer, Valuer or Estate Agent.
CAN THE VALUATION BE CHALLENGED?
There is a presumption of honesty with this new tax. An exact valuation will not be required unless the property is valued at €1 million or more. However, Revenue will challenge cases where it is obvious that an undervaluation has occurred in which case they can raise an assessment on the undervaluation.
If such a situation arises, the tax payer can appeal the assessment to the Appeal Commissioners.
HOW IS LPT CALCULATED?
The amount of LPT depends on the property value.
Property values are organised into bands. The first band is for property values between €0 and €100,000. After that all values are in €50,000 bands. Where the property has a value of in excess of €1m an exact valuation is required.
Once the property owner has identified the band in which his/her property falls into, the LPT will be calculated automatically when filing on line via ROS (Revenue on line System).
It is not necessary to ask your Accountant / Tax Adviser to calculate this tax as there is a ready-reckoner provided to assist those completing their Returns.
But just in case you want to know how to calculate the tax liability, it’s computed as follows:
Again, please make sure you have an exact valuation if your property is worth €1m or over.
WHO HAS TO PAY THE LPT?
The simple answer is the owner of the property on the date the LPT falls due.
The filing date for 2013 is 1st May 2013. For 2014 onwards it will be 1st November.
If you are in the process of selling your property but still haven’t sold it by 1st May 2013 then you will be considered the “liable person” for 2013 even if the property is sold before the end of the year.
The following individuals are liable to pay the LPT:
If two or more people own a residential property they are both liable for the LPT. It is essential that they agree who should file the return and pay the relevant tax. If neither owner pays the LPT then Revenue can collect the tax from either party.
ARE THERE ANY EXEMPTIONS?
There are a number of exemptions including:
HOW DO WE PAY THE LPT?
The liable person must complete the tax return and select the preferred payment option.
If you prefer submitting a paper return the due date for both filing and paying is 7th May 2013. In other words you must enclose a cheque, bank draft or postal order with the completed form.
If you wish to submit a return on line there is an extended filing date to 28th May 2013 with the following options:
WHAT IS MEANT BY A “PHASED BASIS”?
A phased basis means:
HOW WILL AN EMPLOYER KNOW TO DEDUCT LPT?
Revenue will advise the employer of the amount to be deducted.
If a payment is deducted from the individual’s salary at source it is not subject to charges or interest.
WHAT HAPPENS IF THE LPT RETURN IS NOT SUBMITTED?
Revenue will pursue the amount by raising a “Notice of Estimate” using a wide range of collection options including:
WILL INTEREST AND PENALTIES APPLY?
Interest and penalties on late payments will apply.
Not submitting an LPT Return could result in a penalty of the amount of the LPT that would have been payable on a correctly completed return up to a maximum of €3,000.00. This penalty could arise even if the individual has actually paid the LPT.
A Tax Clearance Certificate will not be issued to the individual.
If you are obliged to file Income Tax, Corporation Tax or Capital Gains Tax Returns, you will incur a 10% surcharge at the relevant filing dates, if you have not filed your LPT Return and paid the corresponding liability or entered into a payment agreement. The surcharge will be capped at the amount of the LPT liability only in situations where the LPT position is subsequently brought up to date.
WHAT HAPPENS IF I OWN MORE THAN ONE PROPERTY?
Taxpayers who own more than one property are obliged to pay and file on line. They do not have the option of submitting a paper return and accompanying cheque, draft or postal order.
WHAT IF I CAN’T PAY THE LPT?
In certain circumstances an individual can opt to defer the payment of taxes if certain conditions are met.
It is important to remember that a deferral is not an exemption.
The deferred tax will remain as a charge on the property until the property is sold or transferred to another person.
There are four categories of deferral of the LPT:
Revenue will review applications in respect of the first three categories and following its review will grant or deny the deferral application. These deferrals are not restricted to owner occupiers. They can apply to personal representatives of deceased liable persons, individuals who have entered into insolvency agreements under the 2012 Personal Insolvency Act as well as those who have suffered unavoidable and unexpected significant financial loss and cannot pay the LPT without excessive hardship.
The fourth category dealing with the Income Threshold does not involve an approval process. The thresholds are based on gross income providing certain conditions are met. The standard income threshold can be increased if the claimant pays mortgage interest and this category of individuals must be owner occupier i.e. it does not apply to owners of multiple properties.
I STILL HAVE QUESTIONS
If you still have questions, please contact us on 01- 872 8561 or visit the revenue site http://www.revenue.ie
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