For Local Property Tax (LPT) purposes, a residential property is defined as any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling. This is similar to the position for the Household Charge, which applied to a building (including a house, flat, maisonette, or apartment) which was occupied or suitable for occupation as a separate dwelling.
If a residential property is suitable for use as a dwelling but is unoccupied, it is still liable to LPT, which will be calculated based on the valuation of the property. However, if the property is not suitable for use as a dwelling, it is not liable for LPT. Where a property owner considers her/his property is not suitable for use as a dwelling, s/he is obliged to notify the Revenue Commissioners as soon as possible after receiving her/his LPT Return. The owner must also include relevant supporting documentation; for example, an engineer’s report. Based on the information provided by the property owner, Revenue will consider the claim and make a decision on the matter.
Section 10(2) of the Finance (Local Property Tax) Act 2012 (as amended) provides that a residential property shall be exempt from LPT where it is situated in an unfinished housing estate. Section 10(1) of the Act defines an “unfinished housing estate” as a development of two or more buildings that is specified in a list prescribed under section 10(3) of the Act by the Minister for the Environment, Community and Local Government for the purposes of the Act. Section 10(4) of the Act prescribes a range of circumstances to which that Minister shall have regard for the purposes of that section.
The Minister for the Environment Community and Local Government has prescribed and published this list, which is set out in the schedule to the Finance (Local Property Tax) Regulations 2013 and was compiled by local authorities utilising the categorisation employed for the purposes of the National Housing Survey 2012. The Survey was carried out over the course of summer 2012 by the Department of the Environment, Community and Local Government in conjunction with local authorities and the Housing Agency.
The categorisation methodology for the survey was different to that which was used in 2011 and which provided the basis for the waiver from the Household Charge. That earlier categorisation related largely to the level of on-site activity at the time the 2011 survey was carried out and had less to do with the physical character of a development. The 2012 survey was based purely and objectively on the actual state of completion of a development. Only developments that were deemed by local authorities to be in a “seriously problematic condition”, regardless of whether a developer was on or off site, were included.
For purposes of preparing the final list of developments to which the exemption from the LPT would apply, local authorities were asked by the Department of the Environment, Community and Local Government to confirm or update the then existing list as appropriate. I stress that the decision as to whether an estate is on the list of unfinished estates is in the ambit of local authorities and the Department of the Environment, Community and Local Government and not in the ambit of the Department of Finance or the Revenue Commissioners.
In addition to the above, section 10A of the Finance (Local Property Tax) Act 2012 as amended provides for a temporary exemption of at least three consecutive years from the charge to Local Property Tax (LPT) for residential properties that have been certified as having “significant pyritic damage”.
The Finance (Local Property Tax) (Pyrite Exemption) Regulations 2013, which were signed earlier this month by the Minister for the Environment, Community and Local Government, set out the methodology for the assessment of dwellings to establish significant pyritic damage. The Regulations require that homeowners demonstrate significant pyritic damage in accordance with the recently published standard by the National Standards Authority of Ireland, I.S. 398 – Reactive Pyrite in sub-floor hardcore material – Part 1. This standard provides guidance on the building condition assessment, as well as on the sampling and testing to be carried out to establish the presence of significant pyritic damage.
To be eligible for an exemption from the LPT, a homeowner must obtain a certificate, from a competent person, confirming the presence of significant pyritic damage on the basis of a building condition assessment in accordance with I.S. 398-1:2013 and having regard to the outcome of the testing and classification of the sub-floor hardcore material carried out in accordance with I.S. 398-1:2013. Eligibility for an exemption will be determined by reference to the presence of significant pyritic damage in the relevant property concerned.
Conscious of the need to reduce costs to affected homeowners, the regulations provide for the use, where feasible, of the results from testing of the sub-floor hardcore undertaken prior to the publication of I.S. 398-1:2013, to classify the hardcore material if the testing that has already been carried out is in accordance with, or equivalent to, the test methods provided in I.S. 398-1:2013, and this has been validated as such by a competent person.
A Building Condition Assessment in accordance with I.S. 398-1:2013 will be required to be carried out by a competent person irrespective of when the testing is, or was, carried out.
A homeowner cannot claim the exemption until the relevant certificate has been issued in respect of the residential property. He or she should notify the Revenue Commissioners at that stage to claim the exemption. Special arrangements will apply in respect of 2013 and 2014 to facilitate homeowners in claiming an exemption. While homeowners who do not have the relevant certificate on the first liability date of 1 May 2013 (liability date for 2013), or by 1 November 2013 (liability date for 2014), will be required to pay LPT for those periods, they will be able to reclaim the tax paid if they obtain the certificate by 31 December 2013 and notify the Revenue Commissioners in writing on or before 31 January 2014. As an alternative to such retrospective treatment they can opt to start the period of exemption from the liability date following the issue of the certificate.
For those properties that are not exempt, LPT is a self-assessment tax so it is a matter for the property owner to calculate the tax due based on his or her assessment of the market value of the property. The condition of the property would be one of the factors that a property owner would take into account in valuing her/his property.
