Over the last few days, some additional information has emerged on the operation of the Local Property Tax, from Ministerial responses in the Dail, media coverage and requests for clarification from us on behalf of members.
Householders will receive letters from revenue during the first two weeks of March. These letters will contain an LPT return, guidance notes on valuations and on the completion of the return, and an estimated valuation from Revenue. Approximately 1.6 million letters will be issued over this period.
The register used in this mailshot is being derived from the Local Government Management Agency database (used for the Household Charge), Revenues own listings and also information from the utility providers, for example the ESB. Because of the variety of sources used, it is almost inevitable that there will be errors. Because of the volume of taxpayers involved, even a small error percentage will affect large number of people – a 5% error rate would involve 80,000 taxpayers. The self-assessment nature of the tax requires that recipients of incorrect letters notify Revenue of the mistakes. An incorrect valuation will necessitate displacing the Revenue Estimate in the correspondence with a more accurate determination of which band the property falls into. If correspondence in relation to a property is received, where the recipient is not the owner, that issue will also have to be addressed. Revenue are likely to seek some documentary evidence in this kind of situation.
We understand that the Revenue guidelines will include drawing property owners’ attention to the Property Services Regulatory Authority property price register (http://www.propertypriceregister.ie/) and a method to help property owners establish average/indicative values for properties in different locations.
In addition to stamp duty records and other valuation data, other data sources being assembled include:
- The Geo-Directory produced by Ordinance Survey Ireland and An Post, which provides information on property location and type.
- Spatially derived data that indicate relative distances of all residential properties (using GeoDirectory) to a series of key amenities and services (transport, health, education, retail, emergency services etc).
Revenue is geographically linking data to publicly available sources such as the Central Statistic Office Census 2011 results at small area level and the 2011 Pobal HP Deprivation index.
We also gather that the Citizens’ Information Bureau has agreed to assist property owners in completing their LPT returns.
Lands, gardens etc
The approach being taken is very similar to the approach taken in arriving at the exempt amount for CGT Principal Private Residence relief.
A residential property is defined in the Local Property Tax legislation to include not just the dwelling house itself but also any other buildings or structures and any land that, in a broad sense, belongs with the dwelling house and that are enjoyed as an amenity rather than used for a commercial purpose. These are regarded as an intrinsic part of the dwelling house. Such buildings or structures would include, for example, garages, sheds, outhouses, greenhouses and tennis courts. Land would include driveways, yards, gardens, woodland and lakes. Thus, in the case of a farmhouse, any land used for farming purposes will not be included in the chargeable value of the farmhouse.
There is no limit placed on the extent of the area that is occupied by buildings and structures, regardless of their distance from the dwelling house. However, the extent of any land that is to be included in the chargeable value of the residential property is limited to one acre.
Is social housing liable?
Under the Finance (Local Property Tax) Act 2012, owners of residential properties, including rental properties are liable to pay the local property tax. In the case of housing provided by local authorities and social housing organisations, the local authority or housing organisation is liable for the tax. However, an exemption from the tax applies where ownership is vested in a public body or an approved charitable body and used to for people with special accommodation needs.
A Parliamentary Question was raised in this regard which is reproduced here –
“Deputy Olivia Mitchell asked the Minister for Finance if the local property tax will be paid by the National Assets Management Agency and by the banks where residential properties are in their ownership; and if he will make a statement on the matter. [3154/13]
Minister for Finance (Deputy Michael Noonan): I have been informed by the Revenue Commissioners that the owner of a residential property is generally the liable person for the purposes of the charge to Local Property Tax. This is on the basis that he or she has the right to immediate possession of the property or is entitled to receive the rent if the property is rented rather than occupied by the owner. It is also on condition that no other significant long-term interest in the property has been created, such as a leasehold interest for at least 20 years, or a life tenancy. In such circumstances it is the lessee or the life tenant who is the liable person and not the owner. In most cases the role of the National Asset Management Agency (NAMA) is that of a secured lender; it is not the owner or operator of properties. Properties remain under the control of NAMA’s debtors and appointed receivers/administrators. Where these properties are subject to the Local Property Tax it will be the responsibility of the debtor or receiver to ensure compliance. However, there are occasions where NAMA takes residential properties directly onto its balance sheet.
Thus, where NAMA or a bank has such possession or right to receive rents in relation to a residential property they will be the liable person. Neither NAMA has nor the banks have any specific exemption from the Local Property Tax.”
Residential properties affected by pyrite
It seems that some houses subject to a certifiable level of pyritic heave should receive a waiver from the Local Property Tax. We understand that this issue will be addressed in the context of the Finance Bill.