Updated April 14th : Almost every home owner in Ireland should have received their Local Property Tax Return by now – but there are probably still some to be sent.
Many homeowners are worried about, or don’t fully understand the process for calculating how much property tax they should pay.
The new Local Property Tax is based on the market value of each dwelling on May 1st 2013 . See the Valuation Bands and Amounts here.
Who is going to decide on the property value ?
Property Owners are responsible for declaring which valuation band their home falls into as at May 1st 2013.
The Revenue Commissioners Property Tax Form (LPT1) is accompanied by a letter giving an Estimate of the property tax due for 2013 . This revenue estimate is based on average values in the area – it is not based on an individual valuation. It could be lower or higher than the amount you need to pay.
If you don’t return the form – the estimate is the amount you will be liable to pay – but you need to return the form and enter the valuation band that you think your house belongs to. The estimate is not a bill or a demand.
Revenue have provided an online mapping tool for to help owners value a property – but they will not provide a valuation for each house in the country. (That would be impossible to do with any accuracy).
See more here about the Revenue Valuation Map Website
You can also look at this article that shows Irish house price increases going back to 1980 - which might be useful in trying to estimate the current value of your house
Revenue don’t have any clue how big your house is or how many bedrooms it has . They won’t know if it is detached , terraced or semi detached or how big the garden is or if you have gold plated taps. All they can try to estimate is the average price of houses in your area – so that will be the basis of any estimate of the property tax due. The estimate could be way off the real value.
Finance Minister Michael Noonan has said in the Dail that this Revenue Estimate of LPT “is not a valuation of the property nor should it be regarded as an accurate calculation of the amount of LPT that they should pay”.
The estimate is being provided so that if a property owner fails to submit their LPT return Revenue will have an amount of tax that they can then enforce collection of .
Property owners are still obliged to provide a valuation of their property – and when they do , the Revenue Estimate of LPT will no longer be relevant.
Minister Noonan also said that the “Revenue valuation guidance is intended to assist property owners, but each owner will need to consider the specifics of his or her property, the area and any other local factors that influence the value when making his or her valuation assessment.”
The valuation date is set at May 1st 2013 . The value is to include garages , out houses and gardens / land of upto 1 acre. (Any land over 1 acre that goes with the property is not to be used for valuation.) The valuation at May 2013 will hold for three years until there is a revaluation in November 2016 – regardless of any improvements to the house or any problems that arise.
Some homes can have a reduced valuation for property tax purposes where it as been adapted for occupation by a disabled person . This will only apply where the adaptation was grant-aided by a local authority.
The reduction in valuation is limited to the maximum grant payable (currently €30,000) – but if the adaptation cost less than €30,000 – then this will be the reduction in valuation allowed. See more details about disability here
The completed LPT Return form will have to be sent back to Revenue by 7th May 2013. There is also an option to file an LPT Return form online at revenue.ie – which has to be done by 28 May 2013 .
If a Local Property Tax Return is sent to a person who is not the liable owner of the property, he or she need to inform Revenue that they are not liable and let Revenue know who is liable .
So – it looks like there’s no avoiding the Local Property Tax. Even if your house is missed off the Property Tax Database it will be spotted when it is sold or inherited. Revenue have said that if a property owner doesn’t get a Property Tax return they need to contact Revenue .
There are probably going to be thousands of tax returns issued to people who don’t own the property – but if they ignore it the Revenue will start charging them anyway – and the default option is deduction from salary or pensions/benefits.
A recent IMF report mentioned that self assessment for property tax was not very common – they only mentioned one place where it had been used with success – and that was Bogota in Columbia !
A 2002 internal report by staff at the World Bank about Property Taxes – mentioned that “self-assessment is an appealing procedure to poor countries with little administrative capacity. It does not require assessment staff, and it appears to be easy to implement.”
A recent World Bank report about property taxes said that ……
“Self-assessment can lead to inaccurate estimates of property values with a tendency toward underestimation. It violates the principle of fairness on the basis of ability to pay because people with comparable properties will not necessarily pay comparable taxes. Generally lower-valued properties have a lower rate of underestimation than do higher valued properties, making this assessment approach regressive (taxes are relatively higher on low-valued properties). Under-estimation also obviously erodes the size of the tax base .”
It is hard to see how many rural dwellers , especially the elderly – are going to be able to guess the value of their home. They might have lived in the same house for 30 or 40 years – with the only houses sold near them in recent years being newly built ones. The property price register will be no help – because it only lists location and price – no mention of bedrooms or size etc. As Oliver Hardy used to say – ” another fine mess “