Selling your Home: Local Property Tax update

If you are preparing to sell your house in the coming months, it is important to remember that you are liable for payment of the Local property tax for 2016 as you are the owner of the property on the “liability date” of 1 November 2015. With the LPT single debit authority payment date on 21 March 2016, it is important that sellers remember to pay for the full year even if they intend to sell the property shortly. A receipt evidencing the full payment should be given to the buyer on closing the sale.

However, sellers should not fear that they will be left out of pocket for the full year’s tax liability. As a buyer would have the benefit of the house from the day you close, fairness dictates that they should pay the LPT from that date forward. It is normal to agree to apportion the amount across the entire year and seek a refund from the Buyer of the LPT from the day of closing to the end of the year.

The amount payable will depend on the valuation that was given to the property. The initial valuation date for LPT purposes spanned the period from the 1 May 2013 to 31 October 2016. Budget 2015 provided that the revaluation date of property for LPT has been postponed until 2019. Homeowners will now no longer face an increase in their LPT liability in 2017 due to rising property values.

As property values have increased since May 2013, Revenue have introduced guidelines aimed at reducing the number of referrals to Revenue by solicitors seeking an LPT clearance certificate for sellers who sell their house for considerably more than the chargeable value declared for the property.

The main changes are as follows:

  • General clearance applies for all property sold for €300,000 or less regardless of the chargeable value declared for the property
  • In Dublin, the sale price is allowed to exceed the chargeable value declared for the property by a margin of 50 per cent
  • Outside Dublin, the sale price is allowed to exceed the chargeable value declared for the property by a margin of 25 per cent
  • The above margins apply also in cases where the value of the property has increased due to improvements carried out.

For more information in relation to Local Property Tax or selling your house, please contact any member of the team.