Q. How much is the Local Property Tax?
A. The simplistic answer is the tax is 0.18% of the market value of your home up to a value of €1m and 0.25% on any portion of the value that exceeds €1m. But the reality is more complex as the market value will be rounded up or down depending on the band it falls into.
The bands are in blocks of €50,000, so a house valued at €260,000 will fall within the €250,001-€300,000 band and will be valued for tax purposes at €275,000 — the mid-point in the band. The owner will have to pay €495 as opposed to the lower sum of €468 that would apply to the actual value of €260,000. That works to the advantage of someone with a house valued above the mid-point — for example the owner of a house with a market value of €290,000 will also pay €495 instead of the €522 that would apply if the tax was a straightforward cut off the actual value.
Q. Are those rates set in stone?
A. No. From 2015, local authorities will be allowed to impose their own tax rate so long as it is no more than 15% higher or lower than the standard rate, so they could begin imposing a rate as high as 0.21% or as low as 0.15%. The Government has promised not to raise the standard rate during its lifetime but there is no impediment to any future government changing the rate.
Q. Who has to pay the tax?
A. Subject to some exemptions, anyone who owns a house or apartment, whether that is the dwelling they live in or one they rent out, will be liable for the tax. A separate payment will apply to each property they own. The only exception is where there is a tenant with a long-term lease, that is over 20 years, or a life tenancy. In those cases, it is the tenant, not the owner, who is liable. Where two or more people jointly own a house, they will have to agree between themselves who pays or how much each pays but if one refuses, the other(s) will be liable for the full amount.
Q. When does it have to be paid?
A. It comes into effect on Jul 1, 2013 (so only a half year’s charge will apply next year) but the paperwork begins before then.
The Revenue Commissioners are to start contacting homeowners next March with an estimate of the value of their home and will be seeking a formal agreement or alternative assessment of value to be returned to them by May 7. Payment by single lump sum is expected by Jul 21, 2013, and staged payments will be expected to begin on Jul 15 and be completed by the year end. PAYE workers who opt to have the tax deducted at source will see it disappear from their pay or pension from Jul 1. Late payments will command an additional fee. Some low-income owner-occupiers (with gross income of €15,000 or less for a single person or €25,000 or less for a couple) will be allowed opt for deferred payments but interest will be charged and both the payments and interest will become due when the property is sold.
Q. How will my home be valued?
A. Revenue will send out an estimate but they will also provide a set of guidelines for self-assessment or allow for a professional valuer to submit their opinion. Where there is a dispute, Revenue will decide the value but there will be an appeals process.
Q. How will Revenue get the money from me?
A. They’re hoping you’ll pay voluntarily through the same mechanisms as applied to the Household Charge so there will be options to pay by cash at local authority offices, online by credit or debit card, by direct debit from your bank account, or deduction at source from your pay, occupational payment, or social welfare payments. The Minister for Finance is warning they will pursue anyone who doesn’t pay and the tax will attach to the property and accumulate, so even if they don’t catch you while you own it, the liability will have to be met before the property can be legally sold or transferred.
Q. Are there any exemptions from paying the tax?
A. Anyone who was exempted from paying the Household Charge will now be exempt from the Local Property Tax so that includes people in ghost estates, people out of their home because of long-term physical or mental health problems, owners of mobile homes, charities, and public bodies who hold ownership of homes for people with special accommodation needs such as the elderly or people with disabilities. In addition, first-time buyers who buy in 2013 will be exempt up the end of 2016 as well as anyone who buys a newly constructed or previously unoccupied home any time up to the end of 2016.
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