How will 85% property price rise affect annual LPT bills?

How will 85%  property price rise affect annual LPT bills?

The local property tax filing deadline for year 2020 was November 25, 2019.

This filing date was the due date for notifying Revenue if you wish to change from once-off payment to phased payment, or deduction from payroll or single farm payments, as an alternative method of payment.

Friday, January 10, is the latest date to pay your LPT, if paying in full by cash, cheque, credit card or debit card.

For those who previously selected for 2019 to pay their LPT by SEPA (once-off direct debit), the payment details should remain valid on file for 2020, with the payment due to be taken on March 21, 2020.

You should review your 2020 Local Property Tax (LPT) record, by logging in to Revenue’s https://lpt.revenue.ie/ LPT website.

To log in, you will need your property identification (ID) number and PIN number (available on previous LPT correspondence) and your PPS number.

If you cannot locate your property ID and PIN number, you can submit a request online under the “Request a Property ID and PIN” function, and your property ID and PIN should then issue to you by letter.

The amount of local property tax payable for 2020 remains based on the valuation of the property at May 1, 2013 (albeit the rates payable for properties in the Cork County Council area for 2020 are up 5% from 2019 levels).

2020 is most likely the last year under which the LPT rate will be based on the May 2013 valuation, the next valuation date is expected to be November 1, 2020, which will form the basis for the 2021 LPT liability.

At a national level, property prices have risen substantially since 2013, by close to 85% in the intervening period.

A house valued at €245,000 in 2013 (valuation band 4) may well have jumped three or four or even more bands upwards in value. Applying the national average increase, this property could conceivably find itself in the ninth band for LPT, which is €450,000-500,000.

While that is not immediately relevant in terms of this Friday’s payment deadline, it will become much more relevant when it comes to ascertaining the LPT due next year.

For instance, a house in the Cork County Council area valued at €240,000 carries a LPT liability of €425, whereas a house in the €450,000-500,000 bracket carries a LPT liability of €855.

The revised valuation date was scheduled to fall in 2019, however this was deferred for a year by Finance and Public Expenditure and Reform Minister Paschal Donohoe, to give sufficient time for the Budgetary Oversight Committee to consider a review group report on the dynamics of the LPT, and potential changes to it.

The Minister suggested the review group found significant but geographically uneven increases in residential property price levels, which made it difficult to identify a scenario that would deliver on the condition he set, that there should be relative stability for all taxpayers in their LPT liabilities, and that any increases should be modest, affordable and fair.

The report issued by the review group recommends that valuations should be reviewed every four years, for a balance between timely capture of changes in the property market, and reducing compliance and administration costs, while it would also facilitate regular addition of new properties into the LPT charge (new properties acquired since the valuation date of 2013 have been exempted from the LPT).

The group considered six options:

  • Leaving the LPT rates as is, and applied to the new valuation accordingly
  • Toning down the LPT rates of LPT applicable to each band by applying a rate of 0.114% to the mid-point of each valuation (for example, a €450,000-500,000 house would carry an LPT liability of €541
  • LPT rate changes varying between 0.085% and 0.144%
  • LPT rate ranges from 0.108% in band 1, increasing in increments of 0.001% to 0.126% in band 19, thus effectively tapering the LPT rate to a higher rate per €1,000 for houses with a higher value
  • Reducing the rates as per the previous option, but maintaining the minimum LPT charge at €90, as is currently the case
  • Increasing all existing bands by 80%, for instance a house currently in the €200,000-250,000 bracket would face no increase in LPT, if the value of the house would fall within a new bracket of €360,000-450,000.

Ultimately LPT may become a political football in 2020, which is expected to be an election year.

Given that the LPT affects some 1.3m households throughout the country, it is likely that political parties will be eager to outdo each other, when it comes to promising that LPT reform will not affect their prospective voters.

In the meantime, make sure your LPT for 2020 is up to date, and arrangements for payment are in place.

Self -employed taxpayers can face a 10% penalty on top of their income tax return liability, where their LPT is not up to date.

Persons should obtain professional advice relevant to their own circumstances.

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