# If you sell your home for 15% above your LPT valuation...



## Brendan Burgess (13 Aug 2014)

http://www.irishtimes.com/life-and-...-bill-for-shortfall-in-property-tax-1.1895097



> Guidelines for sellers of residential property published by Revenue  state if a home increases in value by greater than 15 per cent of the  estimated value declared by the owner for property tax, they face a new  valuation on the sale of the house.
> 
> 
> Revenue will only provide clearance to sellers if they can show the  valuation placed on their property on May 1st last year, when the tax  was introduced, was made in good faith and is broadly accurate. Upward  revisions can be backdated to that date.


Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.


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## monagt (13 Aug 2014)

> Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.



The 200k extra could be due to factors outside the property such as wealthy buyer paying way over the odds (say 25-30%) to buy the house because of sentimental reasons (and I have witnessed such a purchase).

It does not make every house in estate/road more expensive because the next house went for the normal price in the neighbourhood.

So why should one house be an anomaly? 

Is the purchase price = value of the property? (Generally yes but not always)

Also, I sell my house at a premium because a specific buyer needed it (for whatever reasons), has my property tax been undervalued for the last 12/24 months???


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## Steven Barrett (13 Aug 2014)

Brendan Burgess said:


> Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.



Except it goes against their own guidelines: From page 4 



> PROPERTY SOLD WITHIN A VALUATION PERIOD
> 2.1 Continuation of valuation until following valuation date
> The usual valuation rule is that the chargeable value that applies in relation to a valuation date continues to apply until the following valuation date. Thus, the chargeable value at 1 May 2013 covers the period up to 31 October 2016 and the chargeable value at 1 November 2016 covers the period up to 31 October 2019.



file:///C:/Users/Steven/Downloads/guidelines-sale-transfer.pdf

These guidelines were only published last month. It looks as if the Revenue are looking to take advantage of rising house prices.

If you live in an estate and every house is valued in May 2013 at €300,000 but without an official valuation. You then sell for €400,000 today, you get hit with the higher tax? Doesn't sound fair.  


Steven
www.bluewaterfp.ie


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## twelve (13 Aug 2014)

There was an official from the Revenue's LPT division on Morning Ireland, and the message I heard was that as long as the original valuation was sound and reasonable, it wouldn't generate an increased liability on the vendor if the new valuation (sale price) brought it into another band. 

Also, that any change of up to 15% wouldn't attract their attention.


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## Bronte (13 Aug 2014)

SBarrett said:


> These guidelines were only published last month. It looks as if the Revenue are looking to take advantage of rising house prices.


 
Looks to me like Revenue are making it up as they go along. As we discussed in this thread:

http://www.askaboutmoney.com/showthread.php?t=188371


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## T McGibney (13 Aug 2014)

Bronte said:


> Looks to me like Revenue are making it up as they go along. As we discussed in this thread:
> 
> http://www.askaboutmoney.com/showthread.php?t=188371



That wouldn't be a first. Time they were brought to heel.


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## Bronte (13 Aug 2014)

T McGibney said:


> That wouldn't be a first. Time they were brought to heel.


 
And what on earth does revenue mean by this:

_Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same._

Does that mean nobody was allowed to keep their original valuation, even though it genuinely might have been correct.  This of course would apply in particularly in the rapidly rising Dublin market.


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## Sunny (13 Aug 2014)

I recently sold a house for 30% over the valuation. I was able show that I based the original valuation on a similar house sale in 2013 and Revenue accepted it without looking for the increased amount.


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## Bronte (13 Aug 2014)

Sunny did you get a certificate from revenue to satisfy the purchasers solicitor?


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## mandelbrot (13 Aug 2014)

Bronte said:


> And what on earth does revenue mean by this:
> 
> _Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same._
> 
> Does that mean nobody was allowed to keep their original valuation, even though it genuinely might have been correct.  This of course would apply in particularly in the rapidly rising Dublin market.



I would have thought its meaning clear - they couldn't give a figure. Ie they don't have it recorded in a way that easily allows that total to be garnered.


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## Bronte (13 Aug 2014)

mandelbrot said:


> I would have thought its meaning clear - they couldn't give a figure. Ie they don't have it recorded in a way that easily allows that total to be garnered.


 
But they are able to give figures for those who had changed their valuation.


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## Sunny (13 Aug 2014)

Bronte said:


> Sunny did you get a certificate from revenue to satisfy the purchasers solicitor?


 
Yep.


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## mandelbrot (13 Aug 2014)

Bronte said:


> But they are able to give figures for those who had changed their valuation.



Which is the opposite of "allowed to stay the same"...!


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## Bronte (13 Aug 2014)

Sunny said:


> Yep.


 
And what did you have to provide them with to get this certificate?  Is it a standard certificate, any chance if it is that you could scan it.


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## Bronte (13 Aug 2014)

mandelbrot said:


> Which is the opposite of "allowed to stay the same"...!


 
I don't know. (Bit slow on the uptake sometimes)

 But Sunny applied for and was allowed stay the same. So I guess they know how many Sunnies have applied for the stay the same certificates needed for closing sales.


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## mandelbrot (13 Aug 2014)

Bronte said:


> I don't know. (Bit slow on the uptake sometimes)
> 
> But Sunny applied for and was allowed stay the same. So I guess they know how many Sunnies have applied for the stay the same certificates needed for closing sales.



Not necessarily, we'll have to wait and see what Sunny got in his case.

You're talking about a call centre type environment, where work items go through the system, and are only identified as a certain category. If the category is too broad, ie it includes other types of query or issue, then it may not be straightforward to identify what you want.

Edit:
I suppose my point is, barring a conspiracy theory, if Revenue had the figure they'd give it. If they don't have it, it's because their system doesn't separately identify it.


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## Sunny (13 Aug 2014)

Bronte said:


> And what did you have to provide them with to get this certificate? Is it a standard certificate, any chance if it is that you could scan it.


 
I didn't see it. My solicitor requested clearance from Revenue and then forwarded it on to the buyers solictor. I have no idea of what form it takes. Maybe a solicitor here will be able to answer. 

By the way, we are not talking about a big house here. It was valued in the 100k to 150k bracket but was sold for 198k. I was able to show houses on sale in the area for with an asking price of €140k-€150k in 2013 and also used the price register to give an idea of the local property market. I never heard anything back after providing an explanation for the valuation.


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## ashambles (13 Aug 2014)

> I didn't see it. My solicitor requested clearance from Revenue and then forwarded it on to the buyers solictor. I have no idea of what form it takes. Maybe a solicitor here will be able to answer.


Can you remember roughly how long it took to get the clearance. Was it days or weeks?  

The process has to start after sale agreed so sellers are under pressure which allows the possibility that Revenue could tune the delay to be long enough to dissuade people from bothering even if it's a clear cut case.

They can take as a compliment or insult but Revenue are the Ryanair of government departments. (Except Ryanair are getting bit softer of late.)


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## Bronte (13 Aug 2014)

*Revenue on Pat Kenny Newstalk today*

Everybody with a property selling for 15% over the original valuation to revenue need to get *written clearance*.

There is a procedure.

The solicitors and owners are under an obligation to ensure there is a property history (I think she mentioned prices and payment history to be kept)

If under 15% difference, you can go online/ or the solicitor can.

Form is called LTP5 (not sure if I got that right)

You will have to clarify that the original value is true.

Pat asked her why the threashold was so low, as all properties in the Dublin area have gone up way more than this 15%. She said this is under review. 

He asked her wasn't this a waste of taxpayers money, paying revenue to do work that is not needed. She confirmed that most cases are correct, and that a small amount are incorrect. He then asked her again wasn't the cost of this a waste in comparision to the couple of hundered Euro they might get.

The process is quick she said. Except for the small number of cases under review.

All you have to do to keep your original valuation, is prove you kept to the revenue guidelines of the time.

Tthey are only concentrating on cases where they have a suspicion.

Proofs mentioned were *a) property price register b) properties within the area c) comparing like with like*. This is what revenue will look at basically.

The clearance process has existed from day one of this tax.

A solicitor has rung in and claimed that revenue are making solicitors responsible for yet another thing, they it is they who will get into trouble and Ireland is clogged with taxes and bureocracy. No comment from Revenue on that.

*Advice to revenue*

Can you forthwith increase your 15% threashold to the current increase in Dublin, for properties in the Dublin area. And stop with nonsense reviews about the 15%. Read the papers or send one of your experts to look at the property price register or the stamp duty records that you hold.

I would love to know as a percentage how many of those over the 15% were incorrect, and how much revenue got back in LPT for those.


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## Brendan Burgess (13 Aug 2014)

The 15% is a bit low, but the principle is correct. 

Maybe issue a monthly index to reflect the movement in house prices?  Adjust this for the different counties? 

Maybe add an extra 5% for unique factors. 

But if someone sells their property in rural Ireland for 40% more than they valued it 15 months ago, then they undervalued the property and need to pay more LPT.


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## T McGibney (13 Aug 2014)

Brendan Burgess said:


> But if someone sells their property in rural Ireland for 40% more than they valued it 15 months ago, then they undervalued the property and need to pay more LPT.



Why apply a different standard to rural Ireland, Brendan?


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## monagt (13 Aug 2014)

> Why apply a different standard to rural Ireland, Brendan?



He is probably thinking that "rural Ireland" is lagging in house price rises and the next jump may happen there (Already happened in Cities).

A bit touchy, huh?


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## Sunny (13 Aug 2014)

T McGibney said:


> Why apply a different standard to rural Ireland, Brendan?


 
Because rural houses haven't risen by the same % as houses in Dublin so it is harder to justify a hugely different sale price to the submitted valuation.


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## T McGibney (13 Aug 2014)

Sunny said:


> Because rural houses haven't risen by the same % as houses in Dublin so it is harder to justify a hugely different sale price to the submitted valuation.



But this assumes that the sort of unanticipated scenario that has become commonplace in Dublin recently - ie, two or more bidders bid against each other for a property, and drive the price well above the previous going rate - will never occur in other cities or towns or in the countryside.

How is such an assumption safe?


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## T McGibney (13 Aug 2014)

monagt said:


> He is probably thinking that "rural Ireland" is lagging in house price rises and the next jump may happen there (Already happened in Cities).
> 
> A bit touchy, huh?



Sorry, this is a *discussion* forum. Feel free to ignore my posts if you wish, but I am making a genuine point here, so there's no need for you to question my motivation, thanks.


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## Sunny (13 Aug 2014)

T McGibney said:


> But this assumes that the sort of unanticipated scenario that has become commonplace in Dublin recently - ie, two or more bidders bid against each other for a property, and drive the price well above the previous going rate - will never occur in other cities or towns or in the countryside.
> 
> How is such an assumption safe?


 
He don't think he was advocating it as policy. I think he was saying if that scenario happened today, someone was probably chancing their arm. Anyway, he can speak for himself!


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## 110quests (13 Aug 2014)

It was extremely difficult to value homes in the countryside for LPT as there was so little movement in the market to compare against in the years previous to 2013.

In town estates there were some sales, so approx comparative valuations were feasible. It could be assumed that such sales in the future will attract 2 or more bidders as presently there are so few new builds. 

The % increase may be 30 indeed but this would be on a very low base. An example here in a rural town :120000 3 bed semi which was 300000 at the height.

With 30% increase such a property would edge into a higher valuation bracket at 156000 still leaving it at almost 50% of its highest value. The value placed at May 2013 was true and verifiable yet it is quite possible that 30% increase will occur in 2015 because of the upward trend.


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## mandelbrot (13 Aug 2014)

110quests said:


> It was extremely difficult to value homes in the countryside for LPT as there was so little movement in the market to compare against in the years previous to 2013.
> 
> In town estates there were some sales, so approx comparative valuations were feasible. It could be assumed that such sales in the future will attract 2 or more bidders as presently there are so few new builds.
> 
> ...



The 15% refers to the top of the band though.

So using your example a house valued at 120k would have to increase to 172,500 (150k x 115%), before there'd be any potential issue.


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## 110quests (13 Aug 2014)

Thanks for that clarification.


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## monagt (13 Aug 2014)

> Sorry, this is a discussion forum. Feel free to ignore my posts if you wish, but I am making a genuine point here, so there's no need for you to question my motivation, thanks



Ooops! Motivation? Huh!


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## ashambles (13 Aug 2014)

mandelbrot said:


> The 15% refers to the top of the band though.
> 
> So using your example a house valued at 120k would have to increase to 172,500 (150k x 115%), before there'd be any potential issue.


There's often no slack from the middle of a band to absorb any of that 15%. Most people valued their house for property tax at the top of the lowest reasonable band. 

Possibly if the bands had been 275-325, instead of 250-300 then the range that people mentally value their property might have fitted better with the tax bands. I assume more people like to think their house is worth around 200k, 350k, 400k etc, than around the actual midpoints of the tax bands such as 375k or 325k. 

It now seems you've got to pick the top of your range if you intend to sell within 3 years to minimize future property tax problems, if you think your house is worth 280-320k you better pick the 320 band even though you know if forced to sell now you're unlikely to get that figure.


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## mandelbrot (13 Aug 2014)

ashambles said:


> There's often no slack from the middle of a band to absorb any of that 15%. Most people valued their house for property tax at the top of the lowest reasonable band.
> 
> Possibly if the bands had been 275-325, instead of 250-300 then the range that people mentally value their property might have fitted better with the tax bands. I assume more people like to think their house is worth around 200k, 350k, 400k etc, than around the actual midpoints of the tax bands such as 375k or 325k.
> 
> It now seems you've got to pick the top of your range if you intend to sell within 3 years to minimize future property tax problems, if you think your house is worth 280-320k you better pick the 320 band even though you know if forced to sell now you're unlikely to get that figure.



Sorry, you'll have to educate me on this as I've never used the LPT system, not being a property owner. Are you telling me that you have to actually put a specific value on your property, within the band?!

I always assumed that one simply selects a band and that's it.


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## Bronte (14 Aug 2014)

Brendan Burgess said:


> But if someone sells their property in rural Ireland for 40% more than they valued it 15 months ago, then they undervalued the property and need to pay more LPT.


 
While this is likely in most cases to be true, it is not true in all cases.  Major renovations, change of planning permissions, a new road, school could change a value massively.


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## Bronte (14 Aug 2014)

T McGibney said:


> But this assumes that the sort of unanticipated scenario that has become commonplace in Dublin recently - ie, two or more bidders bid against each other for a property, and drive the price well above the previous going rate - will never occur in other cities or towns or in the countryside.
> 
> How is such an assumption safe?


 
If one follows auctions in other areas than in Dublin, you'll often see a particular property go for far above it's sale price, precisely because two or more bidders want it.


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## Sunny (14 Aug 2014)

I think people are over complicating this. As long as you have a logical explanation to explain the jump between the valuation you put on it for property tax and what it is sold for, there isn't a problem. So if you have renovated or a new train station has opened or property prices have just soared since 2013 and the value has increased, that's not a problem with regard to revenue.


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## Caroleia (15 Aug 2014)

Brendan Burgess said:


> The 15% is a bit low, but the principle is correct.
> 
> Maybe issue a monthly index to reflect the movement in house prices?  Adjust this for the different counties?
> 
> ...




I agree Brendan. I started another thread on this as you know, our problem was I think now one of communication as much as anything else. The first we heard of this was a list of things required by the buyers solicitor which was forwarded to us without comment. All were fine except the last which demanded that we pay the difference between the our original valuation and the sale price-which was considerable due to us being in Dublin. Also they only wanted it paid for 2014. It just didn't make sense to us and still doesn't. Does anyone know how long it takes to get clearance at the moment?


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## Butter (16 Aug 2014)

It was very difficult to judge market value in May 2013. 

As a real life example - we valued a property in May 2013 as band "x". A neighbour's house sold in Nov 2013 at €7,000 over the top of that band. There was some movement upwards in the market by then so I would still say we valued correctly in May that year. 

Two estate agents who valued my house last week think my house will now sell at a value two bands higher than my neighbour's did less than one year ago, ie: over 100k more. 

So my original valuation is now three bands below today's value. I could be one of those people that Revenue says deliberately undervalued - but I genuinely don't think so. When it comes to selling your house - I reckon plenty of people will end up sighing & paying Revenue extra unjustified money just to make sure the sale goes ahead. 

Either a valuation from May 2013 stands for three years or it doesn't.


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## MrEarl (16 Aug 2014)

Brendan Burgess said:


> The 15% is a bit low, but the principle is correct.
> 
> Maybe issue a monthly index to reflect the movement in house prices?  Adjust this for the different counties?
> 
> ...



I agree 100%.

The route of the problem here, is that the Revenue rolled out this property tax withouth having put enough detailed background work into how property prices should be valued and provide these resources to us.

A far more detailed method of valuation on their website, would have resulted in far less "wriggle room" for people when submitting their own estimates of valuations on their properties.

Now, rather than acknowledge that the initial valuation system was very lose and just upgrading it for when we all have to revalue our properties at the end of Year 3, they are trying to take advantage of the fact that some property prices (particularly Dublin) are rising rapidly.

Anyway, one positive is it only matters if your in the process of selling your house so I guess for a large percentage of the population it's not a problem.  Hopefully, the Revenue will improve the rules and system for valuation in the not too distant future, to overcome the current issue.


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## mandelbrot (16 Aug 2014)

Butter said:


> It was very difficult to judge market value in May 2013.
> 
> As a real life example - we valued a property in May 2013 as band "x". A neighbour's house sold in Nov 2013 at €7,000 over the top of that band. There was some movement upwards in the market by then so I would still say we valued correctly in May that year.
> 
> ...



It does stand, of course it does.

In your case the sale of the similar property for 7k more, would support your valuation in the lower band 6months earlier (I'm assuming 7k is less than 15% of the upper end of the band), so I'm not sure what your problem is..?


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## Butter (17 Aug 2014)

mandelbrot said:


> It does stand, of course it does.
> 
> In your case the sale of the similar property for 7k more, would support your valuation in the lower band 6months earlier (I'm assuming 7k is less than 15% of the upper end of the band), so I'm not sure what your problem is..?



My problem is that Revenue has seemingly arbitrarily decided that if you are within 15% of the top of the valuation band, that's fine, but above that then you under declared your property tax valuation. If the estate agents who valued my house this week turn out to be correct, then my house is now 40% over the top of the bracket that I declared and is worth more than 36% more than my neighbour's house sold for 9 months ago. 

So the simplest option looks like I have to justify my valuation to Revenue before I can sell or the worst case is I am seen as a property tax undervaluer cheat & owe them money for 2013 & 2014 because I wish to sell before the next round of valuations in 2016.


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## mandelbrot (17 Aug 2014)

Butter said:


> My problem is that Revenue has seemingly arbitrarily decided that if you are within 15% of the top of the valuation band, that's fine, but above that then you under declared your property tax valuation. If the estate agents who valued my house this week turn out to be correct, then my house is now 40% over the top of the bracket that I declared and is worth more than 36% more than my neighbour's house sold for 9 months ago.



I think you're missing the point here. They're not saying being above 15% means you underdeclared! Everyone has to be able to stand over the valuation they put on their property. Revenue are simply saying if a subsequent sale is within 15% then as far as they're concerned that's not materially different. The alternative, in the absence of setting a threshold for accepted variation, is that on EVERY sale there would have to be clarification given... that would make no sense whatsoever.

If its more than 15% then they want to confirm that the original valuation was reasonable. Yours clearly was, so yet again I don't see your problem.


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