LPT- first time buyer refund?

Hi

We are in the process of buying a new house and as first time buyers are eligible for an exemption on property tax until 2017.

However, the vendors have already paid the tax for 2013 and are requesting a refund from us as part of the contract. Our solicitor has not come up with an alternative solution.

Has anyone else any experience/advice regarding what may be best to do?

My concern is that if we buy out the vendors who is going to refund us?!!

Thanks in advance

The liability date for LPT for 2013 is May 1st, 2013. It is not a monthly tax that can be apportioned.

You didn't own the house on May 1 so you have no liability.

There will be no refund when a person with an exemption buys the house after the liability date.

Good luck with your house purchase, and from the sound of the vendors, stock up on lightbulbs for moving-in day.

Second Mrs Vimes.

You have no liability to refund them. The LPT was paid to the exchequer for ownership of the property on the assessment day and not a day later.

I am surprised your solicitor is not saying no on this. You are exempt anyway.

Good luck with the purchase!

+ 2

Your solicitor should actually be ensuring that it (and all other outstanding charges) is fully paid up by the vendors before contracts are exchanged.

The vendors' reponsibilty - NOT yours.

Stand firm - don't pay it.

N.B.
Check that the property isn't liable to the NPPR (The NPPR is an expensive one especially with penalties added on) or Household charge ... because if it is and your solicitor doesn't pick up on it you'll end up being liable for it.

Your solicitor should be more on the ball with regard to this .. there is no 'alternative solution'.

As an aside ... itemise contents so that you'll know exactly what included in the sale!

I am informed (to my surprise) that the Law Society issued a practice note instructing solicitors to include as a special condition in contracts that the purchaser has to pay an apportioned amount of the tax to the vendor. It also mentions that the tax is for the full year 2013 but reduced by 50% and not just for July-Dec.

The Law Society also notes that FTBs are exempt and that a statutory declaration should be obtained, but as far as I can see Revenue aren't going to refund anyone so I assume that if you are selling to a first time buyer you can't pass on any of the tax?

I think perhaps your solicitor should be getting that clause removed from the contract as you are not liable.

I reiterate my comment about lightbulbs

The law society recommend that LPT is apportioned between vendor and purchaser except where an exemption applies. Where an exemption applies the exempted party furnish a statutory declaration in that regard.

We'll probably see more on exemptions and apportionment as time goes on but that seems to be the current status.

NPPR and household charge will be already covered by your solicitor during the normal course of the conveyancing process as these are nothing new. The LPT is relatively new and that is why it is being queried.

That's very interesting Mrs Vimes. It must be the first tax that persons can pass on to to someone else/claim a rebate on tax paid from someone else. Before the experts start saying no no no-I may be totally wrong there!

I should like to see the Law Society's reasoning in this matter.

My reading of the legislation is that whoever owns the property on the due date for LPT is the liable person.

I cannot see any provision whereby a vendor may recoup all or part of LPT paid from a subsequent purchaser.

Get a grip people.

The OP is buying a house and presumably paying €100,000 or more, a portion of the LPT is in the region of €100.

It is not worth the extra solicitors fee to resolve the issue.

I expect the Law Society issued the practice note for exactly cremeegg's reason - if all the solicitors in the country are including it in contracts then it becomes the norm and they are saved the hassle of negotiating over a small amount.

It's not really a case of passing on a tax - as I said earlier Revenue will not be refunding the exempt FTB any portion as the FTB was not the liable person.

I think it's more comparable to the vendor saying "we've already paid the bin collection to the end of the year and can't transfer the balance so we want the purchaser to reimburse us for it".

Mrs Vimes said:

I expect the Law Society issued the practice note for exactly cremeegg's reason - if all the solicitors in the country are including it in contracts then it becomes the norm and they are saved the hassle of negotiating over a small amount.

It's not really a case of passing on a tax - as I said earlier Revenue will not be refunding the exempt FTB any portion as the FTB was not the liable person.

I think it's more comparable to the vendor saying "we've already paid the bin collection to the end of the year and can't transfer the balance so we want the purchaser to reimburse us for it".

Click to expand...

Why did they take this position though and not just look at it the other way - if you want to factor in the recovery of costs (such as the LPT, or refubishment costs) then why not include this in the sale price, rather than drawing out the process?