Home Sellers Face Bill For Shortfall In Property Tax

Revenue to assess bands if home sells for 15% more than estimate for LPT

Revenue will only provide clearance to sellers if they can show the valuation placed on their property on May 1st last year was made in good faith and is broadly accurate . Photograph: Bryan O’BrienRevenue will only provide clearance to sellers if they can show the valuation placed on their property on May 1st last year was made in good faith and is broadly accurate . Photograph: Bryan O’Brien



According to The Irish Times, hundreds of home-owners have had to pay additional property tax to the Revenue Commissioners before being able to sell their properties.If a home is sold for 15 per cent over its estimated value for the Local Property Tax, the vendor faces a Revenue assessment.

Rapidly rising values in Dublin and other urban centres mean an increasing number of sellers face such scrutiny, drawing attention to properties where the estimated value may have been understated.

Guidelines for sellers of residential property published by Revenue state if a home increases in value by greater than 15 per cent of the estimated value declared by the owner for property tax, they face a new valuation on the sale of the house.

Revenue will only provide clearance to sellers if they can show the valuation placed on their property on May 1st last year, when the tax was introduced, was made in good faith and is broadly accurate. Upward revisions can be backdated to that date.



Figures published last month by Revenue show there were 3,900 properties where the owner had self-corrected upwards their valuation band, and in 20 per cent of cases the increase had been by three valuation bands or more.

Most of these corrections were lodged in advance of sales, according to Ann Looney, principal officer at the Local Property Tax business unit. Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same.

Some residential property values have increased by up to 25 per cent in the last year.

Revenue is advising house sellers to contact them as soon as the sale is agreed in order to establish whether they need to amend the property tax charge, otherwise it could lead to delays in closures.


Sale price

One home-owner contacted The Irish Times to say the value of their property had risen from Band 6 (€300,001-€350,000) to Band 10 (€500,001- €550,000). When the sale of the house was agreed a month ago, the vendor contacted Revenue to pay the remainder of Band 6 monthly repayments amounting to €585 for 2014. They were then informed the sale of the house could not close because the sale price was more than 15 per cent higher than the Local Property Tax estimate a year earlier.

The vendor became liable for €945 at the higher rate. In addition, the charge was backdated to May 1st last year, when a half-year charge was incurred. In all the seller was charged an additional €540. Revenue said it does not comment on individual cases.

According to Simon Stokes of the Society of Chartered Surveyors Ireland, the Local Property Tax valuations were only ever an estimate while the liability lies in the true value of the property, similar to how the self assessment tax system operates.

Source: The Irish Times


Property Owners Risk Penalty Of €7,230 As Amnesty Comes To An End

NPPR penalties set to rise by 50% if second-home property owners don’t settle charges by August 31st

If a property owner has never paid the NPPR charge, they will be liable for an increased fee of €7,230 from September 1st. Photograph: Dara MacDonaill/The Irish TimesIf a property owner has never paid the NPPR charge, they will be liable for an increased fee of €7,230 from September 1st. Photograph: Dara MacDonaill/The Irish Times

According to The Irish Times, landlords and owners of holiday homes are being urged to settle any outstanding NPPR charges before August 31st 2014 to avoid additional late payment penalties, which could be as high as €7,230.
The Non Principal Private Residence (NPPR) charge of €200 was introduced in 2009 applied people who owned a property that was not their private residence, with exemptions allowed for mobile homes and those involved in judicial separation or divorce. It was replaced with the property tax regime last year, but not all owners of multiple properties have yet complied with the charge.The annual charge of €200 applies for all years 2009-2013 and homeowners who have not yet paid the charge are already liable for late payment charges. For example, someone who has never paid the charge now owes €4,220, while a homeowner who missed payment in 2012 and 2013 owes €1,000.

Up until August 31st 2014, no new late payment penalties will be applied to these existing NPPR liabilities. However, if payment is not made in full by this date, or if settlement terms have not been agreed by that date, an additional late payment fee of € 120 per year will be applied on September 1st. In addition, the homeowner’s entire NPPR liability will be increased by a factor of 50 per cent and then frozen.

This means that if a property owner has never paid the charge, they will be liable for an increased fee of €7,230 from September 1st. Those missing payment in2012 and 2013 will see their penalty increase from €1,000 to €1,860. These penalties apply per property, and non-compliant owners of multiple properties will pay a multiple of these charges.

If the aforementioned penalties are not paid,a charge will be held against the relevant property for twelve years after the fees become due, and it will have to be discharged, in full, before a transfer or sale of the property can be completed.

Property owners can contact the relevant local authority to discuss or pay the charge, or alternatively any charges can be settled at www.nppr.ie.


Source: The Irish Times

Employers To Deduct Property Tax From Wages This Month

According to The Irish Times, employers have started cutting the salaries of tens of thousands of employees who haven’t paid their property tax or household charge following instructions from the Revenue Commissioners.

In recent weeks the Revenue sent more than 100,000 “mandatory notifications” to employers and pension providers to begin deducting the pay of liable individuals at source over the rest of the year.

These deductions – which will show up in people’s salaries or pensions from this month onwards – will be substantial in some cases, as many have a liability for both the property tax and household charge.

The household charge – a predecessor to the property tax – was initially €100. But with tax and interest added, those liable face paying at least €215.

The average property tax liability for this year was €315 and half that amount last year, as the property tax applied for six months only. Anyone who hasn’t paid faces interest charges at a rate of 0.02 per cent per day.


Paying dividends

The strong enforcement approach appears to be paying dividends with compliance rates of about 95 per cent for the property tax, slightly ahead of target.Of the 100,000-plus notifications to employers and pension providers, more than 80,000 relate to the property tax and just over 60,000 relate to the household charge.

Revenue’s instructions to employers or pension providers direct them to reduce the amount through the PAYE system or other methods over the remainder of the year. Employees with liabilities were then given five days to pay or show Revenue they did not have any arrears.

Anyone who paid up during this time was able to cancel the deduction, while property owner who pay up over the coming weeks or months will be provided with credit for any payment.


Surcharges applied

While deducting property tax at source is not an option for the self-employed, Revenue said it has refused more than 9,000 tax clearance certificates, while more than 12,000 income tax surcharges have been applied.Similarly, property owners who paid tax under self-assessment but did not include the property tax or household charge are being targeted.

The Revenue said demand letters for outstanding liabilities are being referred to sheriffs and solicitors for collection, or will be the subject of attachment orders unless payment is received immediately.

A further 7,300 people reliant on social welfare have received a deferral on the grounds that their only source of income is from the Department of Social Protection.

The greater-than-anticipated numbers paying property-related taxes and charges has yielded more than €300 million for the exchequer. The figures are good news for the Government, which also announced yesterday that tax revenue for the first seven months of the year is now half a billion euro ahead of target.

The stronger-than-expected performance is likely to give Minister for Finance Michael Noonan greater scope for tax breaks.

The figures show total tax revenue stood at more than €22 billion at the end of July, a 6.4 per cent increase on the same period last year. This is €548 million or 2.5 per cent ahead of target.


Source: The Irish Times

Hard-Pressed Families Set For Five-Year Freeze On Their Property Tax

According to The Independent.ie, Property prices are rising at the highest rate on record  which means that, without a freeze, homeowners would pay substantially larger property tax bills when houses are revalued in 2016.

Ministers are now weighing up whether to announce a property tax freeze in Budget 2015 to give people “clarity” about what tax  bills they’re facing.

Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin have already discussed delaying the revaluation period until there is a “bedding down” of the property market.

Mr Howlin told the Irish Independent: “This is a matter I have already discussed with the Minister for Finance. It is a matter for the Minister for Finance and it is something I know that he will be considering between now and the Budget.”

The move would offer some respite to families left reeling from a raft of new charges and taxes introduced over recent years – although it would do little to compensate for the startling level of water charges being introduced.

Last week it emerged that a family with two adult children will be hit with water bills of almost €500 a year, despite Government promises to keep the ‘average’ charge per household at €238.

Householders are also potentially facing hikes in water charges from 2017, and senior Cabinet members are mindful that this was a major issue on the doorsteps in the damaging local and European election campaign last May.

The Government does not want the recovery in house prices – led by growing demand in the Dublin area – to further burden families with steep hikes in taxes over the coming years.

Senior ministers are looking at keeping the property tax bills at the same level from 2017 to 2019, until the property market evens out.

Mr Noonan is actively considering whether to announce    the valuation freeze in Budget 2015, due to take place in October.

But there are reservations in Fine Gael about declaring a freeze a full two years ahead of the end of the valuation period.

A household’s property tax bill is based on two factors – the valuation of the house, and the rate of tax which will partly be set by councils. Councils can reduce the rate by up to 15pc from next year, but only if they have enough funding.

In terms of valuation, the property tax to be paid from 2013 to 2016 was based on how much the house was worth on May 1, 2013.

But that valuation period runs out at the end of 2016. As things stand, it means the property tax payable in 2017 will be based on the property value on November 1, 2016.

A lack of supply is continuing to push prices up. House prices rose by a quarter in the past year in Dublin with the average house value soaring by €20,000 in just three months.

The average cost of a Dublin home now stands at €349,000, up 24.4pc in a year.

As a result of the rise in house prices in the past year alone, homeowners in the capital would already be paying an extra €90 in property tax after a revaluation.

Even outside of the capital, the average cost of a home is €154,000, a hike of 12.6pc in a year, also meaning an extra €90 property tax rise.

Mr Howlin said extending the valuation period would be a matter for Mr Noonan, but there were reasons to consider it.

“Because the property market has come to such a fluctuation, there is still an extraordinary amount of bedding down happening with recovery happening in some urban

areas, the property market flat in others.”

He said that raised the question “whether the current timeline is appropriate or not”.

“That is something that

Michael has reflected upon and, I think, may have a view on for the Budget,” he said.

Mr Howlin said he gave his own view to Mr Noonan during those discussions.

“This is a new tax. From the discussions we’ve had, including a lot of them on the doorsteps in the first part of this [year], the one thing people want is clarity – because it is uncertainty causing the anxiety. I think there will be a view [that] we need to get as much certainty about what taxes are coming,” he said.

Mr Howlin said that in the area of taxes, a situation needed to be created to allow people “make rational decisions about expenditure and planning”.

“We share the same view on that,” he said.

The Labour Party has been pushing for the valuation freeze, and Junior Social Welfare Minister Kevin Humphreys has led the calls.

Environment Minister Alan Kelly also brought up the freeze at a meeting of a Cabinet sub-committee before the summer break.

Source: The Independent.ie