New taxes hit home
FROM July 1, most homeowners will be forced to pay a local property tax (LPT) based on the value of their homes to fund the provision of local services administered by local authorities.
When the household charge of €100 was introduced in 2012 there were widespread fears that this would rise considerably once people registered, and these fears have now been realised, unless you own a house valued at €100,000 or less.
Under the new LPT system, houses valued under €100,000 will be liable to a yearly tax of €90, €10 less than the household charge which has been abolished since January 1 this year.
This year however, homeowners will only have to pay six months of the LPT as the tax comes into effect on July 1.
In 2014 the full payment will come into effect and will, in many cases, be a sharp increase on the now defunct household charge of €100.
The property tax will not just apply to private citizens, as local authorities and social housing organisations are also being hit with charges which in most cases will run to hundreds of thousands of euro.
This will see the majority of local authorities in the country struggle to balance the books for 2013 as they attempt to eke out the money needed in already straightened budgets.
The LPT for the last six months of 2013 will range from a low of €45 to a high of €877 on properties under €1million. In 2014, these figures will double as the tax becomes due for the full 12 months.
Effectively, properties under €1million will be taxed on the midpoint of the relevant band at a rate of 0.18 per cent.
For properties valued over €1 million, the tax will be charged at 0.18 per cent on the first €1 million of value and 0.25 per cent on any balance in excess of €1 million, with no banding applied.
Payment can be made by credit or debit card, cash, direct debit or by voluntary deduction at source from Irish salary or wages, occupational pensions or certain payments from the Department of Social Protection and the Department of Agriculture, Food and the Marine.
If the LPT is not paid, a charge will attach to the property which must be paid if the property is sold or the ownership transferred.
In advance of the start of the LPT the Revenue Commissioners will be sending out information booklets, in March 2013, to each household liable for the LPT.
This comprehensive booklet will contain details of how to file the tax return on the property or properties owned. It will include Revenue's estimate of the amount of tax due on the property.
Valuation will be by self-assessment in 2013 and those valuations will be used until the end of 2016.
However if a person fails to submit a return, the Revenue Commissioner's estimate of the tax will become payable by default, when it falls due on July 1.
Householders will have to file the property tax return to Revenue by May 7 or May 28 if filing electronically.
The return submitted in 2013 will be valid for the years 2013 to 2016 unless a person's circumstances change or they wish to select an alternativepayment method.
According to the Revenue Commissioners website penalties for those who fail to pay the tax will be as severe as for other forms of tax default. 'If you don't send back the LPT return form and your self-assessment of your tax liability, the tax set out in the Revenue estimate will be collected using normal collection or enforcement options – deduction at source, sheriff, court action, attachment orders.
'Interest and penalties may also apply. In circumstances where standard enforcement is not applied for whatever reason, then a charge will be put on your property. You won't be able to sell it without paying the tax together with interest and, where appropriate, penalties.'
In the case of the self-employed, the Revenue Commissioners will not issue a tax clearance certificate where there is unpaid LPT. Late delivery of an LPT return will be Linked to the filing of an income tax return, thus exposing a self-employed taxpayer to the penalty of an income tax surcharge.
Interest charges of eight per cent per year on late payments will commence from July 1, 2013.
People with gross incomes of up to €15,000 (single) and €25,000 (couples) can defer the full LPT until their financial circumstances improve or the property is sold.
Certain deferral arrangements are also available for people at higher levels of income, and for people whose income is less than a certain percentage of their annual mortgage interest.
Some owner-occupiers may be eligible to apply for marginal relief, which will allow them to defer up to 50 per cent of their LPT liability.
Interest will be charged on deferred amounts at a reduced rate of 4 per cent per annum.