An action plan for filling in your property tax return
Revenue's real objective is to compile a complete list of property values all around the country, writes James Fitzsimons
BY now, over a million people will have received letters from Revenue with an estimate of their Local Property Tax (LPT). So I thought it would be useful to set out a plan for completing your return.
The first thing you've got to do is decide whether the Revenue's estimate is the right value for your property. You could pay an estate agent to do it for you, and if your property is difficult to value, or the value is high, it might be worth getting it done by a professional. It can be used for four tax returns (the half year in 2013, 2014, 2015 and 2016). So you are spreading the cost over four years. And don't forget you pay an extra €90 LPT, in a full year, for each band you move up. That's €315 over four years. Paying for a valuation might be worth it in the long run.
But you are not required to use a professional valuer. It's enough that you take reasonable steps to value the property correctly yourself. And that doesn't mean paying the estimated tax in the letter you got from Revenue. Choosing the right value for your return is the difficult bit. Everything else is easy. Don't forget, even if you are not asked to complete a return, this is a self-assessment tax, and you must file a return. Even if your property is worth nothing, as in the case of some ghost estates that are not ghost estates anymore, you still pay €45 this year and €90 thereafter.
Now that you have the letter and know what the Revenue estimate is, there are three steps to help you decide on the right value for your property. First you should check what value is given for property (detached, semi-detached, apartment, or bungalow) in your area at www.revenue.ie and see whether the estimate in the letter you got from Revenue is the same, higher or lower than the online valuation. The estimate in the letter should be more accurate, but that may not be the case. The price of all residential property sold since January 2010 is available at www.propertypriceregister.ie and this is very helpful in making a decision. If you don't have access to a computer, the Citizens Information Service can help you get this information. Revenue can too.
The Revenue really doesn't know much, if anything, about your property. But you know the property in your area and you know your own property. This might be enough to satisfy yourself that the estimate from Revenue is accurate, in your case. I'm working on the basis that Revenue hasn't a clue what my property is worth and it is up to me to displace its figures. That's what it wants me to do. Ideally, Revenue would like me to pay an estate agent to value my property, which in its eyes might make the list it is compiling more valuable. That's its real objective. It doesn't care about the money, but it will collect because the Government wants it.
The second thing you could do is use one of the free private LPT/value estimators. There's one on www.daft.ie and another on www.myhome.ie. I used both of them and found them helpful. The letter I got from Revenue placed the value of my property two bands away from where it was on the Revenue website. It's a pity that one source can provide such wide variations in value, but then its information is limited in spite of all the work it has put into it and the costs that have been incurred.
There were only 52,000 relevant properties sold since 2010 when the property price register was set up. So most of the information available to the Revenue Commissioners is out of date. Don't rely on Revenue's figures because you are the expert in this case.
I liked the value estimator on daft.ie because it let you put in basic information about your house and gave you an estimate in return. It mightn't be right, but I liked it anyway.
The estimator on myhome.ie gets you to select a property from its list of properties in your chosen area. It then lists the properties that were sold. To me, it was like the Property Price Register with more information and photographs. It ticks the boxes. The values I got from Daft.ie and Myhome.ie came in the band between the Revenue's online guide and the estimate in the letter. So that's it for me. I'm going with the one in the middle, which I believe to be an accurate valuation in the circumstances. It could be lower, I hope it's higher, but I am satisfied it is right. If someone thinks otherwise, hopefully we can agree to differ. Short of selling my home, nobody can answer that.
Finally, you need to consider the overall picture based on your local knowledge. Valuation is the most important aspect of the return, so it is worth giving it a little thought. But don't let it take over your life. Do it now. Make a decision and forget about it.
The experts in Revenue who compiled the data relied on a number of sources that include its own stamp duty statistics, private sources such as Daft.ie and Myhome.ie, Nama's extensive database and the CSO, to mention but a few. Last week, the CSO published its latest figures for residential property prices up to February 2013. It's available at www.cso.ie under "Releases and Publications". It's useable, but not very user-friendly if you don't use statistics very often. It's crude too, on the basis that it only covers 'houses and apartments in, and outside, Dublin' and the information is limited to mortgaged properties. The index suggests that Dublin prices have just started to rise, but not enough to show a trend. Elsewhere they have been falling but much less than before.
Now that I have chosen the valuation band, I can file my return. I'm filing online, so I have until May 28 to submit a return. If I was filing a paper return, it must reach Revenue by May 7. Even though the valuation date is May 1, there is no need to wait until then. Short of another property collapse, or boom, nothing will have changed by then, at least not significantly, unless the increase in Dublin prices continues in the next release from the CSO. There is no disadvantage to filing early. The tax is still not payable until July.
Employers and pension providers will get revised Tax Credit Certificates in June for those who want to pay through their wages and pensions. LPT will be distinguishable from tax credits, which means that employers will be able to determine the value of their employees' property. Not that they don't have more important things to do. This must create a serious breach of confidentiality. Even though employees ask the Inspector of Taxes to collect it in this way, are they happy with the method?
It certainly gives rise to concerns where the Revenue gives the figures to employers, for staff who did not enter into any arrangement at all. I wonder if it gave this any thought, or does it even care?
James Fitzsimons is an independent financial adviser specialising in tax and financial planning