Local Property Tax (LPT)

Introduction

An annual Local Property Tax (LPT) charged on all residential properties in the State came into effect in 2013. A half-year payment was due in 2013, with a full-year payment due in 2014. The LPT is collected by the Revenue Commissioners.

If you own a residential property in the State you are liable for payment of the tax. (This includes local authorities and social housing organisations.) See ‘Who is liable to pay the LPT’ below.

Residential property is any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling and includes grounds of up to one acre. The LPT does not apply to development sites or farmland.

The tax payable is based on the market value of relevant properties. The LPT is a self-assessment tax so you calculate the tax due based on your own assessment of the market value of the property. Revenue does not value properties for LPT purposes but provides guidance on how to value your property – see ‘Valuing your property’ below.

Revenue offers a range of methods for paying the tax. You can opt to make one single payment or you can phase your payments in equal instalments. Read about how to pay your LPT in 2014.

Deadline for compliance

The Revenue Commissioners have announced a deadline of 31 March 2014 for people to bring their LPT affairs up to date and avoid interest or penalties. A nationwide compliance programme is due to start in April 2014. Read more here.

Household and Non-Principal Private Residence Charges

The Local Property Tax (LPT) replaces the Household Charge which was abolished from 1 January 2013. Household Charge arrears that were not paid by 1 July 2013 were converted into LPT and will be collected by Revenue through the LPT system. The Non-Principal Private Residence (NPPR) charge on second homes applies for 2013 and should be paid to the relevant local authority.

Summary of LPT procedure

During March 2013 Revenue wrote to residential property owners – see ‘Who is liable to pay LPT’ below. This letter included an LPT Return form for completion, an explanatory booklet and a Revenue Estimate of LPT liability. The Revenue Estimate of LPT liability is not a valuation of a property nor should it be regarded as an accurate calculation of LPT liability. It is simply the amount that Revenue will collect from property owners if they do not submit their LPT return.

The explanatory booklet helps you to assess the value of your property – see ‘Valuing your property’ below – work out how much you will have to pay, complete the LPT Return form and decide how pay your LPT – see ‘How to apply’ below. You can read the explanatory booklet on the Revenue website (pdf) and see a sample LPT Return form (pdf).

You should have sent your completed LPT Return form back to Revenue by 7 May 2013 if submitting a paper form or by 28 May 2013 if submitting your return online through revenue.ie. The first LPT payment was due in July 2013, the exact date depends on your method of payment – see ‘Rates’ below.

Rules

Who is liable to pay LPT?

All owners of residential property, including rental properties, are liable to pay the tax. The following groups are also liable for LPT:

  • People who have a long-term lease (20 years or more)
  • People with a life interest or long-term right of residence (life or more than 20 years) in a residential property
  • Local authorities or social housing organisations
  • A person acting as a personal representative for a deceased owner (for example, as an executor/administrator of an estate). Trustees or beneficiaries are jointly liable where a residential property is held in trust.

Joint owners: If there is more than one owner they need to agree who will make the LPT return and pay the tax. If no one pays the tax Revenue can collect the Revenue Estimate of the LPT liability from any of the owners.

Rental properties: Where the residential property is rented on a normal short-term lease (less than 20 years), the landlord will be liable for LPT. Long-term leases (more than 20 years), life tenancies and situations where a person occupies a residential property on a rent-free basis over an extended period and without challenge to their right of occupation will be treated as if the occupant owns the property. In these circumstances, the occupant will be liable for LPT.

Liability date

You are a liable person for the Local Property Tax if you own a residential property on the liability (or ownership) date. The liability date is 1 May 2013 for the year 2013 and, for following years, 1 November in the preceding year. So for 2014 the liability date is 1 November 2013.

Unoccupied and uninhabitable properties

If a residential property is suitable for use as a dwelling but is unoccupied, it is liable for LPT. However, if the property is not suitable for use as a dwelling, it is not liable for LPT and you do not need to make an LPT return. If you think that your property is not suitable for use as a dwelling, you must notify Revenue as soon as possible after receiving your LPT return. You must also include relevant supporting documentation, for example, an engineer’s report. Revenue will consider your claim and make a decision using the documentation you provide.

Exempt properties

If a property is a residential property on the liability date in any year (since 2013) it is a relevant residential property and is chargeable to LPT. Certain properties are exempt from LPT. You can find out more in our document on Local Property Tax: exemptions and deferrals.

Note that, even if you own an exempt property, you must still make a return to claim an exemption.

Valuing your property

The tax is based on the chargeable value of a residential property on the valuation date. The chargeable value is defined as the market value that the property could reasonably be expected to fetch in sale on the open market on the valuation date. The valuation date is 1 May 2013 for the 4-year period until 2016. This means that the valuation of your property for LPT purposes on 1 May 2013 will stay the same for 2013, 2014, 2015 and 2016 (even if you make improvements to your property).

Valuation is by self-assessment in 2013 and these self-assessed valuations will be used until the end of 2016.

An online guide providing indicative property values is available. This guide provides average indicative values for different property types in the area. You can check the register of residential property sales, published by the Property Services Regulatory Authority (PSRA), propertypriceregister.ie, when considering the value of your property.

If you follow Revenue’s guidance, Revenue will accept your self-assessed property valuation. Revenue’s valuation guidance is intended to help property owners but each property owner must consider the specifics of their own property when working out their valuation. If Revenue has reason to believe that their valuation guidance has not been followed Revenue may query your valuation.

You do not have to include documentation when submitting your LPT Return. However you should keep copies of the information sources when valuing your property in case Revenue queries your valuation. These might include the property section of your local newspaper, information on the sales price of a similar house sold in the area, information downloaded from property websites or details taken from Revenue’s valuation guidance.

The Revenue Commissioners can legally enter a residential property for the purpose of ascertaining its chargeable value. You must permit a person authorised by the Revenue Commissioners to inspect the property if they consider this necessary.

If you do not submit a Local Property Tax return with your self-assessment of the LPT payable, the Revenue Estimate will become due and payable. The Revenue Estimate is automatically displaced when you submit a return with your self-assessed amount.

Selling your property

You are liable for LPT if you own a property on the liability date. The liability date for 2013 is 1 May 2013 and the liability date for 2014 is 1 November 2013. The actual charge payable on the property is based on its value on the valuation date (1 May 2013 for the period until 2016) and this does not change.

For example, if you sell your property in July 2013 you are liable to pay LPT for 2013. If you own a property on 1 November 2013 and subsequently sell it any time before 1 November 2014 you are liable to pay LPT for 2014. In general this payment should be made before the sale of the property closes.

There is one exception to this. New and previously unused properties that were purchased from a builder or developer between 1 January 2013 and 31 October 2016 will be exempt until the end of 2016 (even if sold again in this period). So if you buy a second hand house that was previously bought for the first time in this period you are not liable for LPT until 2017.

Rates

The Local Property Tax (LPT) is based on market value bands. The first band covers all properties worth up to €100,000. Bands then go up in multiples of €50,000. If a property is valued at €1 million or lower, the tax is based on the mid-point of the relevant band at a rate of 0.18%. For properties valued over €1 million the tax is charged at 0.18% on the first €1 million of value and 0.25% on any balance in excess of €1 million, with no banding applied.

Local Property Tax Table

Valuation band, € Mid-point Rate LPT for a full year 2013 LPT
0 – 100,000 50,000 0.18% 90 45
100,001 – 150,000 125,000 0.18% 225 112
150,001 – 200,000 175,000 0.18% 315 157
200,001 – 250,000 225,000 0.18% 405 202
250,001 – 300,000 275,000 0.18% 495 247
300,001 – 350,000 325,000 0.18% 585 292
350,001 – 400,000 375,000 0.18% 675 337
400,001 – 450,000 425,000 0.18% 765 382
450,001 – 500,000 475,000 0.18% 855 427
500,001 – 550,000 525,000 0.18% 945 472
550,001 – 600,000 575,000 0.18% 1,035 517
600,001 – 650,000 625,000 0.18% 1,125 562
650,001 – 700,000 675,000 0.18% 1,215 607
700,001 – 750,000 725,000 0.18% 1,305 652
750,001 – 800,000 775,000 0.18% 1,395 697
800,001 – 850,000 825,000 0.18% 1,485 742
850,001 – 900,000 875,000 0.18% 1,575 787
900,001 – 950,000 925,000 0.18% 1,665 832
950,001 – 1,000,000 975,000 0.18% 1,755 877
Properties worth more than €1 million will be assessed on the actual value at 0.18% on the first €1 million and 0.25% on the portion above €1 million.

Local Property Tax: exemptions and deferrals

Introduction

Certain properties are exempt from the Local Property Tax and some people may be able to defer payment of the tax if they meet specified criteria.

Exemption for residential properties purchased between 1 January and 31 December 2013

The exemption for properties purchased between 1 January and 31 December 2013 is not restricted to first time buyers. Any person purchasing a property in 2013 will qualify for this exemption from LPT once they occupy the property as their sole or main residence. (This exemption was supposed to only apply to first-time buyers who were owner-occupiers).

You can read more on this exemption on the Revenue website.

Exemptions from the Local Property Tax

The following properties are exempt from Local Property Tax.

  • New and previously unused properties that are purchased from a builder or developer between 1 January 2013 and 31 October 2016 will be exempt until the end of 2016 (even if sold again in that period).
  • Properties purchased between 1 January 2013 and 31 December 2013 will be exempt until the end of 2016. The exemption is subject to certain conditions, including that the property must be the person’s sole or main residence. If the property is subsequently sold or ceases to be the person’s main residence between 2013 and 2016, the exemption no longer applies.
  • Residential properties that were constructed by a builder or developer but remain unsold and have not yet been used as dwellings (known as trading stock).
  • Certain properties situated in unfinished housing estates (commonly called “ghost estates”) specified by the Minister for the Environment, Community and Local Government (pdf).
  • Properties certified as having a significant level of pyrite damage. You can read FAQs about exemptions from LPT for properties with significant pyrite damage on the website of the Department of the Environment, Community and Local Government.
  • Residential properties that are owned by a charity or a public body and used to provide accommodation and support for people who have a particular need in addition to a general housing need to enable them to live in the community (for example, sheltered housing for the elderly or people with disabilities).
  • Registered nursing homes.
  • A property which was occupied by a person as his or her sole or main residence and has been vacated by the person for 12 months or more due to long-term mental or physical infirmity. An exemption may be available in situations where the property has been empty for less than 12 months, if a doctor (registered practitioner) is satisfied that the person is unlikely to return to the property. In both cases, the exemption only applies where the property is not occupied by another person.
  • Mobile home, vehicle or a vessel.
  • Property fully subject to commercial rates.
  • Diplomatic property.

The Finance (Local Property Tax) (Amendment) Act 2013 provides for additional exemptions from LPT:

  • Properties used by charitable bodies as residential accommodation in connection with recreational activities that are an integral part of the body’s charitable purpose such as guiding and scouting activities.
  • A residential property purchased, built or adapted to make it suitable for occupation by a permanently and totally incapacitated individual as their sole or main residence, where an award has been made by the Personal Injuries Assessment Board or a court or where a trust has been established specifically for the benefit of such individuals. In the case of adaptations to a property, the exemption will only apply where the cost of the adaptations exceeds 25% of the market value of the property before it is adapted. The exemption ends if the property is sold and the incapacitated individual no longer occupies it as his or her sole or main residence. You can read more about LPT exemptions for people with disabilities.

To claim an exemption you must complete your Local Property Tax Return and indicate the exemption condition you satisfy (the booklet (pdf) lists each condition). You should submit your return by the relevant deadline (7 May if submitting a paper return and 28 May if submitting your return on-line). If you do not make a return and tell Revenue that your property is exempt the Revenue Estimate may become payable.

Deferring payment of the Local Property Tax

You must be an owner-occupier to be eligible for a deferral of LPT and you must occupy the property as your sole or main residence.

If you meet the deferral criteria you can opt to defer the full LPT until your financial circumstances improve or the property is sold. However this does not mean that you are exempt from the LPT. Interest is charged on the deferred amount and the deferred amount remains a charge on the property.

Partial deferral arrangements will also operate for owner-occupiers under specified conditions. If you meet the partial deferral criteria you can opt to defer 50% of your LPT liability and pay the balance. Interest of 4% per annum is charged on the deferred amount and it remains a charge on the property.

To qualify for full or partial deferral your gross annual income from all sources must not exceed certain amounts (see table below). If you have an outstanding mortgage the income threshold is increased by 80% of your gross mortgage interest.

Income thresholds for full and partial (50%) deferral of LPT liability

Liable person (owner-occupiers only) To qualify for a full deferral your gross income must not exceed To qualify for a partial (50%) deferral your gross income must not exceed
Single, no mortgage €15,000 €25,000
Couple, no mortgage €25,000 €35,000
Single, with mortgage €15,000 + 80% of gross mortgage interest €25,000 + 80% of gross mortgage interest
Couple, with mortgage €25,000 + 80% of gross mortgage interest €35,000 + 80% of gross mortgage interest

Gross income is your income before any deductions, allowances or reliefs. It includes income from Department of Social Protection payments but does not include Child Benefit.

See the sample case studies for worked examples of full and partial deferrals.

The Finance (Local Property Tax) (Amendment) Act 2013 introduces three additional categories that may qualify for a deferral of LPT:

  • Personal representatives of a deceased liable person where a property has not been transferred or sold within 3 years of a liable person’s death may apply for a deferral until (a) the property is transferred or sold or (b) 3 years after the date of death (whichever is earlier).
  • A person who has entered into an insolvency arrangement under the Personal Insolvency Act 2012 may apply for deferral of LPT due during the period the insolvency arrangement is in effect.
  • A person who has suffered both an unexpected and unavoidable significant financial loss or expense, as a result of which he or she is unable to pay the LPT without causing excessive financial hardship, may apply for full or partial deferral. Claims for this type of deferral will require full disclosure of a person’s financial circumstances and any other information required by Revenue in accordance with the detailed guidelines which will be published on Revenue’s website. Following an examination of the information provided, Revenue will determine whether deferral should be granted.

You can get further information in Revenue’s FAQs.