The Finance (Local Property Tax)(Amendment) Act 2021 (“the Act”) was enacted in July of this year with the purpose of the Act being to reform Local Property Tax (“LPT”). The reform of LPT and revaluation of homes has long been deferred by successive Governments due to the potential for homeowners to face significant tax increases if the revaluation occurred under the old LPT system. The Act was introduced to reform LPT in a way that will not unfairly penalize property owners through increased tax bills as a result of the increase in the value of homes in Ireland since 2013.
Pursuant to the Act, residential property owners who own a property on 1 November 2021 are now liable to pay LPT for 2022. They are obliged to also submit a new, self-assessed valuation of their property and submit an LPT return by 7 November 2021.
What you need to do
In order to meet the deadline and your obligations for 2022, homeowners are required to do the following:
- Determine the current market value of your property
As this is a self-assessment tax, homeowners must calculate the tax to pay based on their own assessment of the market value of their property. To assist, homeowners should firstly examine the Revenue Commissioners Property Valuation Guide, which can be found here. This guide will provide an indicative value for your property. While a useful tool, homeowners should carefully consider whether the guidance valuation of Revenue is accurate by reference to the circumstances of their own property to include its size, condition and any recent sales of similar properties in the area.
It is important to note that Revenue officials will be able challenge homeowners who attempt to undervalue their homes so homeowners should ensure that they are able to stand over the valuation they submit.
- Submit the LPT return which will include your property valuation
- Pay or make arrangements to pay the LPT charge for 2022.
You can choose to pay your LPT in full single payment or over a number of monthly direct debit payments.
The return and payment can be made online through the LPT Online service.
The rate of LPT paid will not be identical in every local authority jurisdiction. Each Local Authority will have the option to increase or decrease the LPT rate by up to 15% from the basic rate which is known as the Local Adjustment Factor. Local Authorities can amend their Local Adjustment Factor every year so it is important for homeowners to note that the figure they pay for LPT may change year on year.
For the purposes of the valuation, Revenue says that a residential property will include certain lands or buildings that have a domestic or residential purpose.
- A yard, garden or patio
- A driveway or parking space
- A garage, shed or greenhouse
- A garden room or home office
Where the land associated with your property is greater than one acre in size, land up to one acre (0.4047 hectares) only should be valued with the property.
While the deadline is set at 7 November 2021, Revenue has said that homeowners who miss this deadline, must still submit their valuations.
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About the Author
Philip is an associate solicitor in the Property team at Hayes solicitors. He has a range of experience acting for clients in varied transactions including the purchase, sale, mortgaging and refinancing of both residential and commercial premises.