The next valuation date for local property tax (LPT) is 1 November 2021. Taxpayers are required to self-assess the value of their own property. Revenue will contact 1.4 million property owners on their LPT obligations in the coming weeks and has provided an interactive valuation tool for guidance on valuing a property. The valuation determined on 1 November will apply for the four-year period from 2022 to 2025 and will serve to determine the LPT charge for taxpayers for those years. LPT returns are due by 7 November 2021.
What needs to be done for 2022?
Taxpayers must do the following three things to meet their LPT obligations for 2022:
- Determine the market value of residential property at 1 November 2021;
- Submit an LTP return, including the valuation determined on 1 November 2021, by 7 November 2021; and
- Pay or make payment arrangements for the 2022 LPT charge.
Revenue is issuing letters in advance of the valuation date, which will include the taxpayers property ID and pin for accessing LPT online.
If a taxpayer has not used the LPT online service for previous years, they will be issues with a paper Form LPT1. Taxpayers who are liable to LPT on more than one property, and those with a property valued at greater than €1.75 million must submit their return online. Further information on submitting an LPT return is available on the Revenue website.
Even if a taxpayer is eligible for an exemption to LPT, they must still value their residential property on 1 November and submit a LPT return to claim the exemption in the return. The ‘section 8’ exemption i.e., those who had purchased and occupied a property as their sole or main residence in 2013, is not available for the LPT valuation period from 2022 to 2025 inclusive. Similarly, the exemptions for new or unused property purchased from a builder or developer since 2013, property held as trading stock and in unfinished housing estates are also no longer available.
In its press release on the launch the 2022 LPT campaign Revenue reminds taxpayers whose properties were previously exempt that they need to register newly-liable properties at www.revenue.ie and complete the same three step process.
Taxpayers with vacant properties and those claiming an LPT deferral must also submit an LPT return by 7 November 2021.
Valuing a property
Revenue’s interactive valuation tool indicates the average valuation band for properties by ‘Small Areas’. Small Areas are compiled by the National Institute of Regional and Spatial Analysis, on behalf of the Ordnance Survey Ireland. There are about 18,600 Small Areas in Ireland, usually with 50 to 200 properties in each. Revenue, in its press release, is reminding taxpayers that the tool is a guide only. Other information sources for valuing a property are also advised. These include:
- referring to the Residential Property Price Register, to check the price of properties sold in the same area in recent years;
- obtaining a professional valuation of the property; and
- referring to other information sources, such as newspapers, information from local estate agents, and commercial property sales websites.
LPT is payable on any residential property and other land, yards or gardens etc., up to one acre, associated with that property. The part of land, yards or gardens etc., that is to be included in the valuation is the part that is most suitable for enjoyment with the property. Sections 5 of the Finance (Local Property Tax) (Amendment) Act 2021 provides for a revised definition of ‘residential property’. It details that ‘residential property’ includes any building that is used, or suitable for use, as a dwelling. A residential property subject to commercial rates may be exempt from LPT.
Previous provisions which prevented Revenue from displacing self-assessment values of properties under €1 million where their valuation had been established in accordance with Revenue guidance no longer apply. The self-assessed values for properties on 1 November 2021 will be subject to the normal compliance regimes that apply to other self-assessed taxes.
Revenue confirmed at a meeting of the Joint Committee on Housing, Local Government and Heritage on Tuesday 6 July, in which the changes to LPT were discussed, that given the exceptional conditions within the housing market, in preparing its valuation guidance Revenue would not “over-rely or rely too heavily on more recent values because, … they are not necessarily reflective of the underlying market condition”.
Revenue accepted that it is difficult to put a value on a property when a nearby property listed for a certain price went for far above that due to a bidding war. Revenue confirmed it would not necessarily expect to see the final sales value on an LPT return in such cases.
Taxpayers should keep a copy of any information sources used to determine the market value of property.
Determining the charge to LPT
Taxpayers can use Revenue’s online LPT calculator to calculate their 2022 LPT charge.
The valuation determined on 1 November 2021 establishes the valuation band and basic LPT rate for the period 1 January 2022 to 31 December 2025. Each Local Authority can increase or decrease the LPT basic rate by up to 15% (Local Adjustment Factor).
The valuation bands and LPT basic rates are as follows:
| Valuation band number | Valuation band € | LPT charge basic rate € |
| 1 | 0 – 200,000 | 90 |
| 2 | 200,001 – 262,500 | 225 |
| 3 | 262,501 – 350,000 | 315 |
| 4 | 350,001 – 437,500 | 405 |
| 5 | 437,501 – 525,000 | 495 |
| 6 | 525,001 – 612,500 | 585 |
| 7 | 612,501 – 700,000 | 675 |
| 8 | 700,001 – 787,500 | 765 |
| 9 | 787,501 – 875,000 | 855 |
| 10 | 875,001 – 962,500 | 945 |
| 11 | 962,501 – 1,050,000 | 1,035 |
| 12 | 1,050,001 – 1,137,500 | 1,189 |
| 13 | 1,137,501 – 1,225,000 | 1,408 |
| 14 | 1,225,001 – 1,312,500 | 1,627 |
| 15 | 1,312,501 – 1,400,000 | 1,846 |
| 16 | 1,400,001 – 1,487,500 | 2,064 |
| 17 | 1,487,501 – 1,575,000 | 2,283 |
| 18 | 1,575,001 – 1,662,500 | 2,502 |
| 19 | 1,662,501 – 1,750,000 | 2,721 |
The Local Adjustment Factor applied by each Local Authority for 2022 are as below:
| Local Authority | 2022: Percentage Reduction on Base Rate | 2022: Percentage Increase on Base Rate |
| Carlow County Council | Nil | 5% |
| Cavan County Council | Nil | 15% |
| Clare County Council | Nil | 15% |
| Cork City Council | Nil | 9% |
| Cork County Council | Nil | 7.5% |
| Dun Laoghaire Rathdown County Council | 15% | Nil |
| Donegal County Council | Nil | 15% |
| Dublin City Council | 15% | Nil |
| Fingal County Council | 10% | Nil |
| Galway City Council | Nil | Nil |
| Galway CountyCouncil | Nil | Nil |
| Kerry County Council | Nil | 7.5% |
| Kildare County Council | Nil | 10% |
| Kilkenny County Council | Nil | 15% |
| Laois County Council | Nil | 10% |
| Leitrim County Council | Nil | 15% |
| Limerick City & County Council | Nil | 15% |
| Longford County Council | Nil | 15% |
| Louth County Council | Nil | Nil |
| Mayo County Council | Nil | 10% |
| Meath County Council | Nil | Nil |
| Monaghan County Council | Nil | 15% |
| Offaly County Council | Nil | 15% |
| Roscommon County Council | Nil | 15% |
| Sligo County Council | Nil | 15% |
| South Dublin County Council | 15% | Nil |
| Tipperary County Council | Nil | 10% |
| Waterford City & County Council | Nil | 10% |
| Westmeath County Council | Nil | Nil |
| Wexford County Council | Nil | 10% |
| Wicklow County Council | Nil | 6% |
For properties with a market value greater than €1.75 million no banding applies, and the actual value of the property needs to be declared. The LPT charge for these properties is calculated as the sum of:
- 0.1029% of the first €1.05 million of declared market value of the property;
- 0.25% of the portion of the declared market value between €1.05 million and €1.75 million; and
- 0.3% of the portion of the declared market value above €1.75 million.
The Local Adjustment Factor also applies.
Further information on determining the value of a property and calculating the charge to LPT is available on the Revenue website.
Paying LPT
A taxpayer can pay their LPT charge:
- in a single payment in full;
- in phased payments throughout 2022; or
- in phased payments by deduction at source from their salary, wages, occupational pension etc.
A taxpayer can confirm their payment option for 2022 when filing their LPT return by 7 November. Payment options from 2021 will be carried forward to 2022 unless a different payment option is selected when submitting the LPT return.
The payment dates for LPT are determined by the payment option you choose.
- January 2022 – phased payments start for deduction at source and regular cash payments through a payment service provider
- 12 January 2022 – latest date for paying in full by cash, cheque, credit card or debit card
- 15 January 2022 – monthly direct debit payments start and continue on the 15th day of every month
- 21 March 2022 – deduction date for Annual Debit Instruction payment.
An employer required to collect an employee’s LPT through their payroll can include this amount in their PAYE (Employer) liability within the Tax Debt Warehousing Scheme.
Further information on paying LPT is included on the Revenue website.
Enforcement
Revenue can utilise a number of enforcement options to collect any unpaid LPT. These include the application of an LPT-generated surcharge of up to 10 percent on a taxpayer’s income tax, corporation tax or capital gains tax liability, subject to a limit of 50 percent of the amount of LPT payable and the loss of tax clearance.
LPT-generated surcharge
An LPT-generated surcharge will trigger on the date that an income tax return, corporation tax return or CGT return is filed, where it is filed after the return filing date/payable date for the LPT liability. There is no direct correlation between the year of assessment for which the income tax return, corporation tax return or CGT return is filed and the LPT year.
The ‘test’ as to whether the LPT-generated surcharge applies is done when the income tax return is filed, as long as this occurs on or before the deadline for doing so, i.e., either the statutory return filing date or the online extension date. The ‘test’ consists of asking (in relation to all of a liable person’s properties):
- if any LPT return that was due to be filed, before the date on which the income tax return is filed, has been filed; and
- where all of the LPT returns have been filed, is there any payable LPT liability that is unpaid and that is not being paid in accordance with an agreed payment arrangement.
If the answer to either of these questions is “yes”, the surcharge applies. The late filing of a LPT return and/or the late payment of the LPT liability does not, in itself, generate a surcharge as long as filing and payment occur before the income tax return is filed.
For more information on LPT-generated surcharges see the Tax and Duty Manual Part 07-02 Section 07-38. Note that the previous cap on the LPT-generated surcharge was the full LPT liability. Section 30 of the Finance (Local Property Tax) (Amendment) Act 2021 reduces this cap to 50 percent of the LPT liability.
Tax clearance
Taxpayers who fail to meet their LPT obligations will fail applications for tax clearance and may have their tax clearance status rescinded under sections 36 and 44 the Finance (Local Property Tax) (Amendment) Act 2021. It will be important for taxpayers in receipt of COVID-19 supports to have their LPT return filed and payment arrangements in place by the appropriate deadlines.
For further information contact Dave on 091 586020 or dave@dvmannion.ie