Important Dates
Liability date is the ownership date on 1st May, 2013
Paper return due by 7th May
Online return due by 28th May
What is it?
It is a tax on wealth rather than income.
Due to the previous disasters in collecting taxes and particularly the widespread refusal to pay the household charge the government has imposed some severe penalties this time.
So would be conscientious objectors who are non-payers - you are warned.
The penalties actually benefits compliant tax payers.
What are the rates
It's calculated at .18% of the middle of each band. So take Band 1 ranging from 0 -100k. Midway is 50K @ .18% is 90 Euro.
For the first year, 2013 you pay half the rate. And this is also the last year to pay the NPPR as this tax replaces it.
valuation|2013|full year
0-100k|45|90
100k-150k|112|225
150k-200k|157|315
200k-250k|202|405
250k-300k|247|495
300k-350k|292|585
350k-400k|337|675
400k-450k|382|765
450k-500k|427|855
500k-550k|472|945
550k-600k|517|1,035
600k-650k|562|1,125
650k-700k|607|1,215
700k-750k|652|1,305
750k-800k|697|1,395
800k-850k|742|1,485
850k-900k|787|1,575
900k-950k|832|1,665
950k- 1m|877|1,755Properties over a million
For properties valued over €1 million the tax will be charged at 0.18% on the first €1 million of value and 0.25% on any balance in excess of €1 million, with no banding applied.
Anyone with a very expensive property should seek the services of an auctioneer to value the property. You will be issued with a certification of value. Unless your valuer is completely incompetent or both you and he are willing to falsify the valuation there should be no problem with Revenue who will accept the document at face value.
Self-assessed Tax
For the first time a lot of PAYE workers will have to do a self-assessment and this probably has led to a lot of unnecessary scaremongering. The powers that revenue have against people who make false returns has been bandied about but really there is no difference on this tax than what landlords, shopkeepers and other self-employed people had to do up to now in doing their tax returns. If you're honest and put a realistic valuation there should be no problem.
How to Honestly calculate the valuation
While it is true that unlike other taxes the decision on a valuation is more arbitrary then calculating say CGT as long as you do the following there should be no problems.
List of sites to help you with the valuation
In order of importance:
1. Base it on the actual selling price of a similar property in your area.
You can look up the Property Price register http://www.propertypriceregister.ie/ for recent sales, you can check out the results of Public Auctions in your area, you can check out the result of Allsop auctions, you can ask your neighbours what they sold for, or purchasers what they paid, up to now this was a taboo subject for people but this tax should change that. People who are members of residents associations can ask at the meetings what everybody is valuing their properties at and there will always be a few people there who know what houses have been selling for.
The property price register is based on the stamp duty returns.
Word of warning to those who are coming together in residents associations to undervalue. Don't. It's not worth the stress, the eventual cost and the nightmare of dealing with revenue on this later. If you know a neighbouring house sold for x, then you value your house at x too. It's complete nonsense to think that you can go down 3 or 4 bands to underpay. You might get away with one band, and your house may be not as good as x, then it's fair enough to go down one band. And vice versa.
2. Hire an auctioneer
You only need a walk through valuation so you should not need to pay more than 100 Euro. You do not have to go to the expense of this if you do not wish to. Some auctioneers know certain estates so well for say 50 Euro they might be willing to give you a valuation without even visiting the property. Really when you have thousands of semidetached houses in one estate there is not going to much of a difference in price between them and the auctioneer really knows what they are selling for.
3. Daft.ie Property Tax Calculator
Myhome.ie Property Tax Calculator
Both these companies have been able to produce what is apparently an excellent table which is able to take into account the differences in size, location, number of bedrooms that can affect price. And it's apparently better than the revenue guide (can someone confirm this - we'll know better as time goes by)
4. Asking prices in Daft/My home/newspapers and in auctioneers windows
This can in no way be relied upon. But it can be consulted.
5. Your accountant
They do not have expertise in valuing property, but if they'd done CAT or CGT returns they will know the price of certain properties. But you as the tax payers are responsible for getting the assessment correct not your accountant.
6. Your solicitor
They will know more than accountants for a lot of properties, from probate to house sale and also CGT and CAT.
7. Rebuild cost
This has nothing to do with market value. Currently a lot of properties are worth less than their rebuild cost.
8. Revenue map of valuations bands
This can not be relied upon. Neither can the revenue valuation letters.
What about Granny flats or a building that is subdivided- are they a separate property for this
According to revenue if a Granny flat or subdivided property can be sold separately then yes. But if not you just calculation them as part of the value. (this point has to be clarified by revenue more clearly, currently for the NPPR and household charge each Unit had a separate charge). From the more recent revenue interviews and comments (April/May 2013) it's looking more likely that this is indeed a tax per property and not per unit.
What if you cannot afford it?
Single people earning less than 15K and couples earning less than 25K can defer the tax.
Also in the case of financial hardship it can be deferred. This has to be decided by revenue on a case by case basis and we don't know yet what is acceptable to them.
Deferral
The costs of deferral is 4% of the tax. So if it is not paid for say 20 years it would cost an extra 80% for that year - it is not compound interest.
Example for Band 4 200K to 250K.
The tax is 405 Euro.
405 X 20 years is 8100 in tax
The additional interest would be about €3,000
What is the real costs of Deferral as a percentage?
If the LPT is deferred for 20 years, at current rates, the liability including interest would run to somewhere around 5 - 6% of the property value (assuming static prices). (Thanks to Mandelbrot for this).
If the LPT did not have an interest rate built it then it would have cost tax X .18 X 20 years. So 1.512% of the property value
(someone who is good on how inflation eats into this might have a comment here)
False Declaration
If you make a false declaration, you will pay in addition to the tax you've already paid the full correct amount. For example
Penalties
The penalties are severe at 8% per annum of the tax due. Plus interest.
If you have not paid it then on sale or transfer you will have no choice but to pay it plus the taxes and penalties.
Also revenue have said if you do not pay they will be able to arrange for it to be deducted from you employment, your social welfare payment or pension.
How to fill in online
As I haven't actually done this myself yet I will only be able to give instrucitions in about another week or so.
But one poster did point out that the tax was deducted twice from her bank account and another poster mentioned that it might 'appear' that you have not 'hitten' the button to pay but you actually have and some people might get confused and do it twice.
Unpaid Household charge from 2012 - one off charge
Not sure how this will work but apparently this bill if unpaid will be added into the property tax. And presumably it will mean for those who didn't pay it, well if they refuse now revenue have the power to take it directly from salaries etc.
Liability date is the ownership date on 1st May, 2013
Paper return due by 7th May
Online return due by 28th May
What is it?
It is a tax on wealth rather than income.
Due to the previous disasters in collecting taxes and particularly the widespread refusal to pay the household charge the government has imposed some severe penalties this time.
So would be conscientious objectors who are non-payers - you are warned.
The penalties actually benefits compliant tax payers.
What are the rates
It's calculated at .18% of the middle of each band. So take Band 1 ranging from 0 -100k. Midway is 50K @ .18% is 90 Euro.
For the first year, 2013 you pay half the rate. And this is also the last year to pay the NPPR as this tax replaces it.
0-100k|45|90
100k-150k|112|225
150k-200k|157|315
200k-250k|202|405
250k-300k|247|495
300k-350k|292|585
350k-400k|337|675
400k-450k|382|765
450k-500k|427|855
500k-550k|472|945
550k-600k|517|1,035
600k-650k|562|1,125
650k-700k|607|1,215
700k-750k|652|1,305
750k-800k|697|1,395
800k-850k|742|1,485
850k-900k|787|1,575
900k-950k|832|1,665
950k- 1m|877|1,755
For properties valued over €1 million the tax will be charged at 0.18% on the first €1 million of value and 0.25% on any balance in excess of €1 million, with no banding applied.
Anyone with a very expensive property should seek the services of an auctioneer to value the property. You will be issued with a certification of value. Unless your valuer is completely incompetent or both you and he are willing to falsify the valuation there should be no problem with Revenue who will accept the document at face value.
Self-assessed Tax
For the first time a lot of PAYE workers will have to do a self-assessment and this probably has led to a lot of unnecessary scaremongering. The powers that revenue have against people who make false returns has been bandied about but really there is no difference on this tax than what landlords, shopkeepers and other self-employed people had to do up to now in doing their tax returns. If you're honest and put a realistic valuation there should be no problem.
How to Honestly calculate the valuation
While it is true that unlike other taxes the decision on a valuation is more arbitrary then calculating say CGT as long as you do the following there should be no problems.
List of sites to help you with the valuation
In order of importance:
1. Base it on the actual selling price of a similar property in your area.
You can look up the Property Price register http://www.propertypriceregister.ie/ for recent sales, you can check out the results of Public Auctions in your area, you can check out the result of Allsop auctions, you can ask your neighbours what they sold for, or purchasers what they paid, up to now this was a taboo subject for people but this tax should change that. People who are members of residents associations can ask at the meetings what everybody is valuing their properties at and there will always be a few people there who know what houses have been selling for.
The property price register is based on the stamp duty returns.
Word of warning to those who are coming together in residents associations to undervalue. Don't. It's not worth the stress, the eventual cost and the nightmare of dealing with revenue on this later. If you know a neighbouring house sold for x, then you value your house at x too. It's complete nonsense to think that you can go down 3 or 4 bands to underpay. You might get away with one band, and your house may be not as good as x, then it's fair enough to go down one band. And vice versa.
2. Hire an auctioneer
You only need a walk through valuation so you should not need to pay more than 100 Euro. You do not have to go to the expense of this if you do not wish to. Some auctioneers know certain estates so well for say 50 Euro they might be willing to give you a valuation without even visiting the property. Really when you have thousands of semidetached houses in one estate there is not going to much of a difference in price between them and the auctioneer really knows what they are selling for.
3. Daft.ie Property Tax Calculator
Myhome.ie Property Tax Calculator
Both these companies have been able to produce what is apparently an excellent table which is able to take into account the differences in size, location, number of bedrooms that can affect price. And it's apparently better than the revenue guide (can someone confirm this - we'll know better as time goes by)
4. Asking prices in Daft/My home/newspapers and in auctioneers windows
This can in no way be relied upon. But it can be consulted.
5. Your accountant
They do not have expertise in valuing property, but if they'd done CAT or CGT returns they will know the price of certain properties. But you as the tax payers are responsible for getting the assessment correct not your accountant.
6. Your solicitor
They will know more than accountants for a lot of properties, from probate to house sale and also CGT and CAT.
7. Rebuild cost
This has nothing to do with market value. Currently a lot of properties are worth less than their rebuild cost.
8. Revenue map of valuations bands
This can not be relied upon. Neither can the revenue valuation letters.
What about Granny flats or a building that is subdivided- are they a separate property for this
According to revenue if a Granny flat or subdivided property can be sold separately then yes. But if not you just calculation them as part of the value. (this point has to be clarified by revenue more clearly, currently for the NPPR and household charge each Unit had a separate charge). From the more recent revenue interviews and comments (April/May 2013) it's looking more likely that this is indeed a tax per property and not per unit.
What if you cannot afford it?
Single people earning less than 15K and couples earning less than 25K can defer the tax.
Also in the case of financial hardship it can be deferred. This has to be decided by revenue on a case by case basis and we don't know yet what is acceptable to them.
Deferral
The costs of deferral is 4% of the tax. So if it is not paid for say 20 years it would cost an extra 80% for that year - it is not compound interest.
Example for Band 4 200K to 250K.
The tax is 405 Euro.
405 X 20 years is 8100 in tax
The additional interest would be about €3,000
What is the real costs of Deferral as a percentage?
If the LPT is deferred for 20 years, at current rates, the liability including interest would run to somewhere around 5 - 6% of the property value (assuming static prices). (Thanks to Mandelbrot for this).
If the LPT did not have an interest rate built it then it would have cost tax X .18 X 20 years. So 1.512% of the property value
(someone who is good on how inflation eats into this might have a comment here)
False Declaration
If you make a false declaration, you will pay in addition to the tax you've already paid the full correct amount. For example
Penalties
The penalties are severe at 8% per annum of the tax due. Plus interest.
If you have not paid it then on sale or transfer you will have no choice but to pay it plus the taxes and penalties.
Also revenue have said if you do not pay they will be able to arrange for it to be deducted from you employment, your social welfare payment or pension.
How to fill in online
As I haven't actually done this myself yet I will only be able to give instrucitions in about another week or so.
But one poster did point out that the tax was deducted twice from her bank account and another poster mentioned that it might 'appear' that you have not 'hitten' the button to pay but you actually have and some people might get confused and do it twice.
Unpaid Household charge from 2012 - one off charge
Not sure how this will work but apparently this bill if unpaid will be added into the property tax. And presumably it will mean for those who didn't pay it, well if they refuse now revenue have the power to take it directly from salaries etc.
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