Under the new regime, about 53% of properties will see no change to their annual cost, about 33% or 640,000 homeowners will see an extra €90 per year and 3% will see a higher change
Property tax was first introduced in 2013 primarily as a revenue generating exercise post the financial crash. The idea behind it was, that every three years’ valuations would be revised, and the subsequent cost would change. That never happened, but that’s all about to change.
And the trigger I believe for making these changes now, is (a) the current annual cost is based on valuations which are eight years’ old and (b) property bought by a first-time buyer or any new property purchased regardless of your purchaser status were excluded from this tax.
Under the new regime, about 53% of properties will see no change to their annual cost, about 33% or 640,000 homeowners will see an extra €90 per year and 3% will see a higher change and for some it will be much higher, 55% higher for someone who’s property is valued at €1.75m+.
So, next month when the new property calculations come into effect, we’ll have to revalue our properties in line with any increase since 2013.
And depending on where you live and the type of property you have, the increase in value could be significant which is why, to help cushion the impact the cost, the bands used to calculate the cost have been widened by 75%, and the rate at which the tax is applied is being cut from 0.18% to 0.1029%.
The big differential and increase in cost will be seen on properties which are now valued at €1,137,501 or more.
If you were paying LPT on a property valued in 2013 at €800,000, it would have cost €1,485 per year. But if that same property is now valued at €1,420,000 (it’s being claimed that properties have doubled in value since 2013) you’ll end up paying €2,065 which is 39% increase.
If in 2013 your property was valued at €410,000, your LTP charge would have, been €765.
If that same property is now worth €710,000, the mid-point in this particular band is €743,750 and when the new 0.1029% is applied, the cost stays the same at €765.
So, in this instance the value of the property could have increased by 73%, but the LPT remains unchanged.
Valuing your property
LPT 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 be sold for on the open market on the valuation date.
The previous valuation date was 1st May 2013, and this valuation applies until 1st November 2021.
The new bands and subsequent cost will not be reviewed for another four years, so the next review won’t take place until 2025, so regardless of whether your properties value goes up or down during that time period, the cost will be locked in at 2021 values.
It's likely you have received a letter by now and you must submit what you believe the market value of your property is by the 7th of November. And probably the easiest and quickest way to do is online.
You can register or use your exiting login details for myAccount or ROS. Or you can log in directly to the LPT online service, using the following URL: https://lpt.revenue.ie/lpt-web/ views/login.html?execution=e1s1
To proceed with your submission, you’ll need your property ID, PIN (will be on letter you recently received) and PPSN number.
When filing a return this year and selecting what band your property falls under, you are determining yourself what you believe the fair market value of your property is, and you don’t have to include documentation when submitting your LPT Return.
However, you should have a reference point in case Revenue queries your valuation, so looking at the property price register (www.propertypriceregister.ie) which records the prices of properties sold in your area, or Revenue have an excellent interactive property map or looking at asking prices on websites like daft.ie and myhome.ie. is a good idea.
If the value of what you believe your property was worth and the subsequent LPT you pay was ever challenged, you’ll need to have some logic as to how you arrived at this figure. And what you think your property is worth and what it’s market value is, could be two different things. But the market value is the number you need to work off, and as inflated as some asking prices might be at this time, you have to base your payment on market values right now.
Who must pay LPT?
- All owners of residential property, including rental properties
- 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 organizations
- A person acting as a personal representative for a deceased owner (e.g. 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 must pay 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 must pay LPT.
If a residential property is unoccupied but suitable for use as a dwelling, 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.
You can choose any of these payment methods even if you previously paid in a different way.
Debit/credit card: This option is available online. Note that if you pay by debit/credit card the deduction will be made immediately. The last repayment date using this method is c. 11th January 2022.
Bank single debit authority: Under a single debit authority you can authorize your bank or financial institution to pay Revenue the specified amount of LPT due.
You must tell Revenue by c. 11th January 2022 that you are choosing this method and this amount is then taken from your bank account in one deduction on c. 21st March 2022 and is paid directly to Revenue.
Cash or debit/credit card payments can be made through certain payment service providers and the latest payment date in this regard is c. 11th January 2022.
Cheque or postal order: If you opt for this payment method, make your cheque or postal order payable to the Collector-General and send it along with your LPT1A Payment Instruction form to: FREEPOST, Revenue LPT Branch, PO Box 1, Limerick by 11th January 2022.
Liam Croke is MD of Harmonics Financial Ltd, based in Plassey, Co Limerick. He can be contacted at firstname.lastname@example.org or www.harmonics.ie
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