May-26-2014 in Property
Property charges have been a hot topic in recent years. However, matters are complicated further when you are trying to sell a property.
When selling a residential property there are a number of receipts that you will be obliged to provide to the purchaser as evidence of payment of the following:
- Your Household Charge
- Your Local Property Tax; and
- If your property is not your principal private dwelling house, your Non Principal Private Residence charge.
Below we will look at each tax individually:
Household Charge:
A Household Charge of €100 was charged on residential property in 2012 in order to fund local services. Therefore, if you owned a residential property in Ireland on 1 January 2012, even if you were living abroad, you were obliged to declare your liability for the Household Charge and pay it by the due date. Virtually all private residential properties were liable for the charge. This includes apartments and bedsits, as well as second homes.
Late payment interest and fees apply if you did not pay the charge in full by 31 March 2012 or set up a direct debit.
If your Household Charge payment was still outstanding on 1 July 2013, it was then increased to €200. If by now you have still not paid your Household Charge, it will be added to the Local Property Tax (LPT) payable on your property. If you do not pay this additional €200, interest and penalties will apply under the LPT system.
If you are selling your property you will need to furnish the purchaser with a Certificate of Discharge, waiver or exemption.
Local Property Tax
The Local Property Tax (LPT) replaced the Household Charge which was abolished from 1 January 2013. As mentioned above the Household Charge arrears that were not paid by 1 July 2013 were converted into LPT and will now be collected by Revenue through the LPT system.
The annual Local Property Tax (LPT) charged on all residential properties in the State came into effect in 2013. The LPT is collected by the Revenue Commissioners.
If you own a residential property in the State you are liable for payment of the tax. Residential property is described as any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling. The LPT does not apply to development sites or farmland.
If you own your residential property jointly with somebody, then between the two of you, you need to agree who will make the LPT return and pay the tax. If no one pays the tax Revenue can collect the Revenue Estimate of the LPT liability from any of the owners.
If you are a landlord renting a property for less than 20 years, you as landlord will be liable for LPT.
When selling your property, you as the vendor will need to ensure that your LPT has been paid up to date. When the Contracts for Sale have been signed by both you and the purchaser, you as vendor will need to provide your solicitor with a receipt to prove that you have paid your LPT. As mentioned above, if you have not paid your household charge this will be collected on top of the LPT at the same time by Revenue. In order to obtain a receipt you need to log onto the following section of the revenue website: https://lpt.revenue.ie/lpt-web/views/login.html?execution=e1s1
You will need to following information to log onto the website:
- Your PPSN/ Tax reference number;
- The Unique Property ID; and
- The secure PIN.
All of the above information is contained in the letters you will have received from Revenue regarding the payment of your Local Property Tax. If you own more than one residential property you will need to click into the ‘manage your properties’ section and select the relevant property you are selling. Once all liabilities are paid, you will see a €0.00 balance owing. You will need to print off this page/receipt and give it to your solicitor. If there is an issue in terms of the valuation used for your property then special clearance may be needed for the Revenue Commissioners.
Then, once the sale of your property has completed, the purchaser will then be required to fill out what is called a LPT4 – Change of Ownership Form. This notifies the revenue that they as purchaser are now liable for the payment of LPT on your former property.
Non Principal Private Residence Charge
The Non-Principal Private Residence charge or NPPR was an annual charge that was introduced in 2009 in respect of residential property that is not your only or main residence. NPPR was payable to the Local Authority. As LPT has now been introduced, the NPPR is no longer charged however outstanding liabilities and payments will still be collected.
In order to maximise compliance and encourage payment of outstanding NPPR charge arrears, Section 74 of the Local Government Reform Act 2014 provides that from the 2nd March 2014 to the 31st August 2014 no new late payment penalties will be applied to existing NPPR liabilities. This will provide an opportunity for owners to agree payment terms with local authorities. However, if payment is not made in full by the 31st August 2014 or if settlement terms are not agreed by that date, an additional late payment fee of €120.00 per liability date is applied on 1 September 2014. In addition to that, the entire NPPR liability is increased by a factor of 50% and then frozen.
For example, if you as vendor own a property to which NPPR is payable for all years since 2009 and you have not paid it, the current liability amounts to €4,220.00. From 1 September 2014 this amount will be increased to €7,230.00.
When selling your property you will need to contact your local council, for example if you are living in the Dublin County Council area you need to contact them and ask for the following:
- If the property you are selling is your Principal Private Residence you need to ask for a Certificate of Exemption from the NPPR Charge from 2009-2013; or
- If the property is not your Principal Private Residence you need to ensure that the tax and any penalties have been paid in full and then obtain a Certificate of Discharge from the NPPR Charge from 2009-2013.
Once received, you will then need to give it to your solicitor, who will need to give it to the purchaser’s solicitor on closing.
If you need any assistance or advice in relation to your financial liabilities as mentioned above, please contact a member of the Hayes Property and Private Client team.
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