I propose to take Questions Nos. 94, 112, 113, 139 and 164 together.
The legislation governing Local Property Tax (LPT) is contained in Finance (Local Property Tax) Act 2012 which was signed into law by the President on 26 December 2012. The LPT legislation sets out in detail how the tax is to be administered and provides how a residential property is to be valued for LPT purposes including where there is a change in ownership of the property. The Act also provides for a number of specific exemptions from the charge as well as the possibility of deferring the charge in certain cases of hardship.
The LPT is a self-assessment tax so in the first instance it is a matter for the property owner to calculate the tax due based on his or her assessment of the chargeable value of the property. I am informed by the Revenue Commissioners that they will not be valuing properties for LPT purposes. They are, however, actively preparing valuation guidance and developing tools to assist liable persons in assessing the value of their property. Where these guidelines are used honestly, the property valuation will not be challenged by Revenue in accordance with its normal Customer Service Charter.
For 2013, the charge to LPT is based on the market value of the property on 1 May 2013. In addition, in order to provide necessary certainty, this initial valuation of the property on 1 May 2013 will be the value of the property for the purposes of calculating the LPT charge for all years up to and including 2016. This value will hold regardless of improvements, extensions etc. to the property in question. Likewise, where a property is sold during this period, and the value of the property has increased substantially, there is no additional liability to LPT. I am informed by the Revenue Commissioners that the original valuation provided by the original owner, provided it has been made honestly and fairly, can continue to be used by the new owner to calculate their payment of LPT on the property in question for all years to 2016. Any unpaid LPT should be discharged as part of the conveyance process, and the new owner, as with all property owners, will be required to provide an updated value for the property on the next valuation date of 1 November 2016.
Part 12 of the Act sets out provisions for deferral of the LPT. The deferral of the charge is granted under specific conditions. Where the residential property is the sole or main residence of a liable person and her, his or their estimated gross income from all sources does not exceed €15,000 for a single person or €25,000 for a couple during the year covered by the return, she/he/they will be eligible to apply for full deferral of the LPT charge.
In addition, for income stressed owner-occupiers who have an outstanding mortgage, an adjusted gross income limit will apply. In these cases, the income thresholds of €15,000 or €25,000 may be increased by 80% of the annual mortgage interest payments. This type of deferral is available until the end of 2017.
Moreover, owner-occupiers may be eligible to apply for partial deferral where the gross income from all sources is less than €25,000 in the case of a single person and €35,000 in the case of a couple. For income stressed owner-occupiers who have an outstanding mortgage, these thresholds may also be increased by 80% of the annual mortgage interest payments. In these cases the owner-occupier will qualify for deferrals of 50% of the LPT liability and the balance of 50% of the tax must be paid.
Section 7 of the Act provides an exemption for residential properties that are used to accommodate people with special housing needs where the properties in question are owned by a charity or a public body. To qualify for charitable status, a charity must have been granted an exemption for tax purposes by Revenue to avail of the LPT exemption. Accordingly, regarding Deputy Penrose’s question about a property held in trust for two children with special needs who live with their parents, I am informed by the Revenue Commissioners that the property would not be exempt from the charge to LPT.
Beginning in March 2013, Revenue will be issuing property owners an LPT tax return, an information booklet and a Revenue Estimate of LPT. Having established the market value of their property, the property owner is obliged to complete the LPT return in which they calculate the amount of tax they owe and state how they will pay the LPT due from a range of options. For 2013, the LPT return, if completed in paper form must be submitted to Revenue by 7 May 2013, whereas, if they complete the form online, it must be submitted by 28 May 2013.
Where a property owner fails to submit their LPT return by the relevant due date, the legislation provides that Revenue can enforce collection of an estimated amount of LPT. The Revenue Commissioners advise that this Revenue Estimate of LPT is not a valuation of their property nor should it be regarded as an accurate calculation of the amount of LPT that they should pay. Once the property owner meets their obligations by valuing their property, submitting their return and advising Revenue of their payment preference within the relevant time limits, the Revenue Estimate of LPT notified to them is no longer relevant.
In relation to the resources required for the administration of LPT, additional funding of €25.9m plus €9m in start up funding has been provided to Revenue in 2013 as set out in Department of Public Expenditure and Reform Expenditure Report 2013. Putting additional staff in place takes time and accordingly, I am informed by the Revenue Commissioners that in order to meet the significant challenge involved in establishing the new tax, they have decided to reconfigure their structure in the South West and to base the LPT operations in Ennis. I am satisfied that the Revenue Commissioners will deliver on the challenge and provide a stable source of funds in the form of LPT receipts.
