The Local Property Tax (LPT) Essential Lowdown

The Local Property Tax (LPT) Essential Lowdown

Property Market

The end of July 2020 is the due date for payments of Local Property Tax (LPT). An annual fee charged to all residential property owners, which came into effect in 2013, this year’s LPT was originally due on 21 March.


The COVID-19 curveball necessitated a revisal of the due date and the Irish government issued an extension. Though initially it was put back to May, that same month it was deferred again to 21 July.


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Now as we’re approaching D-Day for the Annual Debit Instruction (ADI), the one-off payment of the tax, it’s time for home-owners to ensure they have the readies in their bank accounts for Revenue to collect.


However, for many people still coming out of the COVID-19 shock, the imminent arrival of the LPT’s date of deduction may not have been top-of-mind – until now.


But whether you’re due to pay or bought a home after 2013 and wondering what LPT means for you, we’ve got the lowdown on everything you may want to know about Local Property Tax.


What is Local Property Tax (LPT)?



LPT is a self-assessed tax charged on the market value of residential properties.


Though local councils have rate-setting powers and even have the power to increase or decrease the base rate by 15%, the initial rates and valuation, along with collection of fees, is carried out by the Revenue.


The tax is collected annually and mostly issued to local councils for local improvements. 20% of LPT payments received, though, are added to an “equalisation fund” that’s then used to support financially weaker councils.


Who Must Pay It?



All owners of residential property, including rental properties, must stump up the cost of the LPT. But there are a few other folks who’ll also need to put the pennies aside for the payment. These include:

  • People who have a long-term lease of 20+ years or life tenancies in a residential property
  • Anyone with a life-interest in a residential property
  • Anyone who lives abroad but owns a residential property in Ireland
  • Local authorities and social housing organisations
  • Personal representatives of a deceased owner, such as an executor/administrator of an estate
  • Trustees, where a property is held in a trust.


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There are also a few property types that are exempt from Property Tax payments including:

  • Any houses or apartments built and owned by the builder or developer but not yet sold
  • “Ghost estate” properties that have remained empty
  • Homes that were vacated by their owners for 12 months or more due to long-term illness

Properties that were self-built between 1 January and 1 May 2013 are also exempt from this round of payments, but owners must shell out on 1 November 2020. 


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Others who’ll be coughing up on the November date are those who purchased a property in or after 2013 when the fee first came into effect.


Though this concession was only supposed to be for first-time homebuyers, an error in the legislation left all residential property purchasers exempt until the next valuation date, which is, of course, November 2020.


However, anyone who bought and then sold their home during this period is only liable for payment on that property in the years they occupied it. It’s the new buyer who needs to brass up with the rest of the tax.


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How Much Do I Pay?



The amount of LPT homeowners pay on their property depends on the market value declared on the property on 1 May 2013.


The basic rate was set at 0.18% for properties valued under €1 million and 0.25% on the amount of the value over €1 million. 


So a house valued between €200,000 - €250,000, is calculated with an annual LPT cost of €405. (Check your annual rate with the Revenue’s Online Calculator).


Of course, with the new valuation date set for November, you can expect your 2021 payment to increase.


How Do I Pay?


Revenue offers several different ways of paying the LPT.  Homeowners can opt to divvy up payments and cash out in equal instalments.


Whether you’re paying this year or just bought a property and want to get your ducks in a row right now for later payments, Revenue offers a range of methods for paying the tax.


You can opt to make one single payment or you can phase your payments in equal instalments.


Phased payments over the year include:

  • Direct debit from your bank account
  • Reduction at source from your salary or occupational pension
  • Deduction at source from certain payments received from the Department of Employment Affairs and Social Protection (DEASP)
  • Cash payments (including debit or credit card) through approved payment service providers.

If you opt for paying in full in a single payment you can do it through:

  • Annual Debit Instruction (ADI)
  • Debit or credit card
  • Cash payments (including debit or credit) through approved payment service providers such as the Post Office, bank, etc.
  • Cheque.


What If I Don’t Pay?


If you don’t pay your Local Property Tax, payment will likely be collected anyway. The Revenue can use a wide range of collection methods including:

  • Mandatory deduction from your salary, wages or occupational pension
  • Attachment of your bank account (this means popping into you’re your account without your consent and picking up the amount owed using an attachment order)
  • Referral of the debt to a sheriff or a solicitor for collection
  • The withholding of refunds of other tax as payment against the amount of LPT due.


Deferral of LPT Payment Possibilities



Of course, if you can’t pay you need to talk to Revenue ASAP.  There are certain circumstances whereby an individual might be able to defer or partially defer LPT payment.


These circumstances include situations whereby:

  • A person’s income is below €15,000 for a full deferral and below €25,000 for a partial deferral. (€25,000 and €35,000 thresholds apply for couples).
  • You’ve just inherited a property/are a representative of a person who has passed away
  • You’ve declared personal insolvency with the Insolvency Service of Ireland (ISI) and have an insolvency arrangement in effect
  • You’re suffering specific “hardship” as a result of significant and unavoidable financial loss in the current year.

However, be aware, that even if you do qualify for any of the above or deferment for other reasons, you still have to pay up at some stage and you should expect around 4% interest to be tagged onto the original fee.


Information about deferring payments can be found on the Revenue’s website. But if the looming deadline is sky-rocketing your stress levels, we also suggest trying to talking to an individual there who can help or calling up your accountant for advice.


Any Chance of Another Extension?

It’s not yet clear if the July deadline will also be extended. But as phase 4 of Ireland’s post-COVID-19 re-opening is set to take place on 20 July, the day before the ADI due date, it’s probably not worth holding our breaths. 


Add to that the fact that the original date (21 March 2020) was extended to 21 May 2020 and is now further extended to 21 July 2020, it’s unlikely the government will keep putting expected payments off.


Though, that said, watch this space – After all, stranger things have happened this year!


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