The property tax clock is ticking….
With only a few weeks left to tell the Crown the value of your home under the new property tax system, it’s time to get started if you haven’t yet decided what price to put on your notepad. The overhaul of the property tax system – the first in eight years – puts more pressure on you than ever before to properly assess your home.
The redesign also brought a number of changes that you should get acquainted with.
Here are ten things you need to know about the new property tax.
1. You must apply for your exemption (if you are eligible)
There are a number of people who can get away with property tax – because they qualify for an exemption. Even if you qualify for an exemption, you still need to assess your property, file a local property tax (LPT) return (where you specify the value of your property) – and claim your exemption.
“In the old system, you didn’t have to apply for the exemption,” said Norah Collender, professional tax manager at Chartered Accountants Ireland and co-author of the 2014 book, Surviving local property tax. To claim your exemption, check the box on your LPT return that relates to the exemption for which you are eligible. You may need to provide Revenue with documents proving that you are eligible for the exemption.
2. Patients can now rent their accommodation withto lose the exemption
A rule has been relaxed for those claiming the LPT exemption because serious health issues prevent them from living in their own homes.
“Under the previous system, no one else could live on the property if you applied for this exemption,” Collender said.
“However, in the new system it is possible to apply for the exemption and have a tenant or friend live on the property.” However, you will not be entitled to the exemption if a co-owner lives in the property.
3. You may have to pay property taxes even if you have never done so before
It is expected that at least 100,000 more homeowners will now have to pay property tax due to a reduction in the number of LPT exemptions available.
“For example, anyone who bought a house in 2013 fell outside the LPT network – but with the new system, they will fall into the LPT network,” Collender said.
“Other properties previously exempt, but which will now enter the LPT network, include properties of ‘ghost’ domains and new and unused properties purchased from a builder or developer.”
The exemption for properties damaged by pyrite is being phased out, although you may still be eligible for this exemption. The pyrite exemption will not be available to those who meet the current eligibility requirements after July 22, 2023. Those who qualify for the pyrite exemption before To this date can still claim it for six years.
There is a temporary exemption for owners of homes damaged by mica that allows those who qualify to apply for the exemption for six years.
4. You don’t have to pay LPT until your property is habitable
All habitable properties built after November 1, 2021 will be subject to the LPT – although it may be 2023 or later before you have to pay the tax. “If a property under construction is not habitable on November 1, 2021, it will not be liable for LPT in 2022 – but if it then becomes habitable before November 1, 2022, it will be liable for LPT in 2023,”, Collender said. “In such cases, the value you place on your property will be retrospective, that is, the value that would have been assigned to the property if it were habitable on November 1, 2021.”
5. Getting Your Worth More Responsiblelaw
You need to decide your home’s value on November 1, 2021 – and that value will determine the property tax rate you pay for the next four years. As was the case when the property tax was first introduced in 2013, you can obtain the Revenue estimate of the valuation range in which your property falls on the online valuation tool available at revenue.ie. However, don’t just rely on the Revenue estimate.
“Under the previous one [LPT] legislation, the tax administration would accept a taxpayer’s self-assessment at its ‘face value’ when the assessment was carried out in accordance with the guidelines of the tax administration – as long as the property was worth less than € 1 million ” , Collender said.
“That safety valve is now gone. Thus, the LPT is now a fully self-assessed tax – and Revenue can challenge the assessment. “
Understand the limitations of the Revenue Online Assessment Tool (and any other). “Sometimes online assessment tools will do the trick; sometimes they won’t be right, ”said Pat Davitt, CEO of the Institute of Professional Auctioneers and Valuers (IPAV).
“Even if you had two appraisers to appraise your property, they could each decide on a different value.
Revenue describes its online assessment tool “for reference only”. “You are responsible for determining the market value of your property,” says Revenue.
“You should consider the specifics of your property compared to other properties in your area. Your property may have unique characteristics that you need to consider.
To help you decide on the correct valuation for your home, check the Property Price Register (PPR) and real estate websites such as daft.ie or myhome.ie, Collender advised. You can also view information from local real estate agents or real estate listings.
“If after doing this you still think you don’t have the information that will help you price your specific home, get a professional appraisal,” Collender said.
“And keep this research so that you can save your assessment if Revenue asks you to justify it.”
6. Gardens and home offices matter
The value you place on your home should reflect your yard and any other land or equipment that comes with your property, such as a driveway, parking space, garage, shed, or home office.
When you have more than one acre of land around the property, you only need to factor in up to one acre of land.
The part of the land that you enjoy is the part most associated with the enjoyment of your property (such as a garden or a yard).
“Those who have added patio furniture or an office to their home need to consider the added value this has brought to the market value of their home,” said Collender.
7. You must assess your property every fourth years
As part of the property tax overhaul, property assessments will be done every four years – rather than the current three years.
Remember, it’s been over eight years since properties were reassessed for property tax purposes – as reassessments due in 2016 (three years after the introduction of the LPT) have been repeatedly postponed.
8. It’s easier to defer your property tax
You can now defer paying your property tax even if you couldn’t before, due to an increase in the income thresholds for such deferrals.
For the LPT paid until 2021, the income thresholds were € 15,000 for a single person or € 30,000 for a couple.
For the LPT due for 2022, the income thresholds are € 18,000 for a single person and € 30,000 for a couple – where the owners have no mortgage.
The income thresholds for partial deferral (when you defer payment of part of your bill) have been increased from € 25,000 to € 30,000 for a single person and from € 35,000 to € 42,000 for a couple – in the absence of mortgage.
An additional allowance is allowed for people with mortgages, provided the mortgages have been taken out before November 2020.
In addition, the interest rate charged on deferred property tax will drop from 4 percent to 3 percent next year.
9. The arrow on the housing may not push your accessorytax bill
Although house prices have skyrocketed since the introduction of the LPT, an overhaul of the property tax system should mean that most people won’t see a significant increase in their LPT bill, according to Collender.
“To account for the rising prices, the LPT has been redesigned to expand the LPT bands,” Collender said.
So, even if the price of your property has increased, it may fall into the LPT bracket that corresponds to the property tax rate you paid previously. “However, people with high value properties could see a big jump [in their LPT bill]”Collender said.
10. Your board could be to blame for your supervisor property tax bill
Even though your LPT rate will be the same for 2022 as before, you could face a higher property tax bill this year – due to the decision by 22 local authorities to increase the LPT base rates in their regions. Local authorities have the power to increase or decrease base tax rates up to 15pc.
The councils that have increased the base rate for 2022 by the highest amount allowed (15pc) are Cavan, Clare, Donegal, Kilkenny, Leitrim, Limerick City and County Council, Longford, Monaghan, Sligo, Offaly and Roscommon.
This could see many homeowners in these areas struggling to pay their LPT for 2022.