Marc Coleman: Avoiding the property tax is not an option any more
Whether or not you intend to pay, you still need to find out how it will affect you
LOCAL property tax is here to stay. Of that there can be no doubt. The Revenue Commissioners have taken charge and there is nowhere to hide. If you don't pay, Revenue can ask your employer to deduct it from your wages, or it can tap into your bank account.
We've passed the point where they might have repealed the tax. If you don't intend to pay, at least find out how this could affect you. If you intend to pay, the information is there to tell you how, when and even how much.
The valuation date and the date for determining who should pay is May 1. The Revenue will write to everyone it believes is liable in mid-March estimating what tax they think is due. But each taxpayer is responsible for making sure they use the right value and pay the correct tax. A facility to help taxpayers to value their property will be available at www.revenue.ie from March.
In the meantime, you could find guidance at www.propertypriceregister.ie. This is produced by the Property Services Regulatory Authority (PSRA) and it records the actual prices at which all residential properties were sold since January 2010.
Local property tax is charged at 0.18 per cent on properties that are valued up to €1,000,000. There are 19 valuation bands for property that is worth no more than a million. The first deals with property valued up to €100,000. The tax is calculated based on the midpoint of the band. In this case, it is €50,000. In a full year, LPT would be €90. In 2013, tax is only charged for half the year. So if your property is valued up to €100,000, the tax due for 2013 is €45.
For property worth more than €100,000, the valuation bands go up in increments of €50,000. There is a ready-reckoner in Revenue's LPT tax guide, which you will find at www.revenue.ie. Say your property is worth between €550,001 and €600,000, for which the mid-point is €575,000, you pay tax in 2013 of €517. But in a full year the tax will be €1,035. Have a look at the Revenue's guide and see can you work out what tax you should pay. Then check it off the Revenue's letter, which you can expect to receive in March. If the Revenue Commissioners' figures surprise you, maybe it's time to call in the valuers.
If your property is worth more than €1,000,000, then you pay 0.18 per cent on the first million (€1,800) and 0.25 per cent on the excess. It doesn't matter whether you are self-employed, or a PAYE worker, or a pensioner. It is up to you to work out the value of the property and pay the correct tax, if you want to avoid interest and penalties.
The ready-reckoner is a useful tool. The only problem is how to put an accurate value on any property these days. Even the Revenue is not standing over its own estimates of tax and is passing responsibility to the taxpayer to get it right. So do a little homework soon rather than later. If you have an active residents association, it might be worthwhile convening a meeting to pool your information.
The market value of the property on May 1, 2013 will form the basis for calculating tax due in 2014, 2015 and 2016. Even if you improve the property in those years, the original
'We've long passed the point where they might have repealed the tax...'
valuation stands. Given the volatile market that still exists, valuation bands of €50,000 are too small to provide certainty, especially for the more expensive properties. The Revenue will have to take a reasonable approach to dealing with valuation error, when even expert valuers don't have the answers.
You must file an LPT return (LPT1) with the Revenue by May 2013. Even if you are not asked for a return by Revenue, this is a self-assessment tax and it is up to you to file a return and pay the tax on time. This will be new for many taxpayers, but something they need to become familiar with.
If you are filing a paper return, the Revenue must receive it by May 7. If you file online, the due date is May 28. The tax should be paid by July.
There are many ways to pay the tax, even more than for a TV licence. There will be approved payment service providers where you can pay in cash. You can make an electronic payment online by filling in your bank details on the LPT Return Form. Debit and credit cards can be used for online payments. Deduction at source by your employer, or pension provider, can be made by prior arrangement with the Revenue Commissioners. This is spread over six months beginning in July.
When you fill in your return in May, you tell the Revenue how you want to pay. But it is up to you to make sure the tax is paid. Even if the Revenue gets it wrong, it is up to you to sort it out. Otherwise, you might pay a higher price.
If you didn't pay the Household Charge last year, you can still register and do so now. If you don't it will be converted to an LPT charge on July 1, 2013 and it will be collected by any means open to the Revenue Commissioners.
If you cannot afford to pay, there may be deferral options. Even then, annual interest will be charged at 4 per cent throughout the period of deferral. But you must make formal deferral arrangements with the Revenue if you want to take this option. If you simply don't pay, interest will be charged at 8 per cent when the taxman takes his share.
Even if you don't own the property, you may still be liable to pay LPT. If you have a life interest, a long-term right of residence, a lease for 20 years or more, or if you are the trustee for property held in trust, or the personal representative of a deceased owner, you may still be liable for tax. Some properties are exempt from LPT. They include certain property purchased from a developer between 2013 and 2016, property purchased by a first-time buyer in 2013, properties in ghost estates, those owned by certain charities, properties affected by pyrite damage, mobile homes, and some others. They are outlined in more detail in the Revenue Guide.
The information is now available to calculate what you should pay. This tax isn't going away.
James Fitzsimons is an independent financial adviser specialising in tax and financial planning