Property

Give me a crash course in . . . local property tax changes

Majority of homeowners won’t see an increase in price but 36% face a higher bill

It is thought the changes will bring more than 100,000 homes into the local property tax system. Photograph: Bryan O’Brien

Brian Hutton
Sat Jun 5 2021 - 06:00

I hear they are going to raise the local property tax? 
That depends on the new value of your property. For some owners it will go up, for some it will go down and for others it will remain the same. The Department of Finance, who announced a revised system for calculating the tax during the week, reckons more than a third (36 per cent) of homeowners are facing a higher bill, just over half (53 per cent) won't see any change, while just over one in 10 (11 per cent) will see a reduction in their tax.

So, how do I work out what I'll have to pay? 
First, you need to work out the value of your house. Existing charges are calculated on valuations carried out in 2013, when the local property tax (LPT) was introduced. Prices have soared wildly since then. This November, you'll have to submit a revised self-assessed valuation and your new bill will be based on that. There are a few ways of working out the new value.

An obliging local estate agent might give you an idea over the phone. You could also check prices of neighbouring properties for sale on the likes of MyHome.ie or what sold recently on the Property Price Register. Professional valuers will cost you, although they argue it could save you in the long term, if your property gets a lower bill. In addition, Revenue will revise its online valuation guide before November. It gives an indicative value for properties in a locality based on type, age and location.

Once I have a new valuation, what next? 
Then just match the value against the new bands published by the department. There are 20 bands in all. Lowest valued properties – up to €200,000 and €200,000-€262,500 – will receive a fixed annual charge of €90 and €225, respectively. There is a sliding rate then from bands three to 11, with all properties in each band facing the same bill. Houses valued at more than €1.05 million will be charged on the exact prices. A rate of 0.1029 per cent will be charged on the value up to €1.05 million and then 0.25 per cent on the amount between €1.05 million and €1.75 million and 0.3 per cent on the balance.

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New houses and first-time buyers are exempt, right? 
Afraid not. When revised bills are issued next year, they will also go out to first-time buyers and new homes bought since 2013 – two groups which were previously exempt. It is thought this will bring more than 100,000 homes into the LPT system, increasing with it the tax take to local authorities and the exchequer from €480 million to about €560 million. Other exemptions for people living in ghost estates and pyrite-damaged houses are being phased out, while a new exemption is being introduced for homes in counties Donegal and Mayo affected by mica concrete blocks. Another change is that houses vacated by an owner due to illness, which are currently exempt on condition the property remains vacant, will in future remain exempt even if rented out.

If it is self-assessed, can't I just put down a lower value? 
Not really, there is a good chance you will be caught. Revenue reviews self-assessments and challenges them where it disagrees. More than 14,900 property valuations have been increased since 2013, after an owner corrected their returns or Revenue ordered a correction. It also collected property taxes owed by directly deducting them from salaries and pensions for about 86,700 properties last year. Revenue also refuses tax clearance certificates and imposes income tax and corporation tax surcharges for unpaid or underpaid LPT returns.