The Finance (Local Property Tax) Act 2012 (as amended) sets out how the tax is to be administered. The Local Property Tax (LPT) is a market value based self-assessed charge. It is based on bands of €50,000 in width for properties valued between €100,001 and €1,000,000. The amount payable is determined by the mid-point of the relevant band. For properties valued at €100,000 and under, the amount payable will be determined by the mid point of that band, that is, €50,000. The tax will be 0.18% of the mid point figure in each band up to €1,000.000. Properties valued under €50,000 will be liable to LPT at the rate of 0.18% of €50,000, which will be represented by a charge of €90 in a full year, and €45 for the half year to be charged in 2013. Both Commissions on Taxation (2009 and 1982) recommended the grouping of values into broad bands, as did the Inter-Departmental Expert Group on the Design of a property tax, known as the Thornhill group. The Government accepted the recommendation of the Thornhill group for a market value based system of self-assessment involving bands of €50,000 in width for properties valued between €100,001 and €1,000,000, and a basic charge determined by applying the tax rate to the midpoint value of €50,000 for properties valued at less than €100,000.
In assessing the appropriate market value bands, the Thornhill Group drew on the work undertaken for it by the ESRI and that carried out in the Department of Finance. The ESRI's work suggests that some 90% of properties are currently valued at €300,000 or less. In making its decision, the Thornhill Group also had reference to work carried out by the Department of Finance, showing that the majority of properties (60%) fell within a valuation range of €100,000 to €200,000. The use of bands allows property owners to place their properties in an appropriate valuation band with reasonable confidence, without potentially being exposed to disproportionate risks if they incorrectly self-assess the value of their property, and makes the valuation process as effective and unproblematic as possible for owners. Grouping all except the most expensive properties into valuation bands will ease valuation challenges for liable persons. The Government decided that a universal liability to the LPT should apply to all owners of residential property with a limited number of exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. There are no plans to exempt properties valued at under €50,000 from the LPT. A person with limited means may be in a position, depending on circumstances, to defer payment of the tax. The deferral provisions contained in the legislation are targeted at cases of needs and better address need than a blanket exemption for all properties valued at €50,000 or under.
