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Property Taxation Administration

Dáil Éireann Debate, Tuesday - 17 December 2013

Tuesday, 17 December 2013

Questions (137)

Catherine Murphy

Question:

137. Deputy Catherine Murphy asked the Minister for Finance if he intends to amend the property tax legislation to remove the obligation to pay property tax in advance of the year it is due in circumstances where the sale of a house occurs after 1 November and before 31 December that liability will no longer apply to the party who have sold the house; if he intends making other changes; and if he will make a statement on the matter. [53683/13]

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Written answers

In accordance with the Finance (Local Property Tax) Act 2012 (as amended), liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date, which was 1 May 2013 for 2013 and for subsequent years, 1 November in the preceding year. For the year 2014, the liability date is 1 November.

LPT liability crystallises on the sale of a residential property and must be paid in full either in advance of the sale or must be deducted from the proceeds of the sale. This includes any LPT that has been deferred by the liable person. Where a liable person sells their residential property between 2 November and 31 December 2013, provided that they owned the property on 1 November 2013, they will be liable to pay LPT on that property for 2014 and the tax must be paid in full at the time of the sale. This is in accordance with section 126 of the Act.

For a tax such as LPT to function properly, legislation must specify a liability date for the tax to have application for a particular year. Whatever date is prescribed, the question of liability when there is a change of ownership has to be managed, and I expect the LPT liability is likely to be factored in during negotiations between the parties on the sale price and the closing date of a particular contract. Furthermore, an individual selling a property will often be purchasing another property at around the same time. While a vendor who owns a property on 1 November 2013 is liable for the 2014 LPT on that property, if s/he does not purchase another property before 1 November 2013 s/he will not be liable for the 2014 LPT on that "replacement" property - whoever is the owner as of 1 November 2013 will be liable.

As there are a number of LPT issues to be considered when buying or selling a house, I am advised that detailed guidance on LPT issues arising in the context of the sale or transfer of a residential property was prepared by the Revenue Commissioners in consultation with the Law Society and is available since last August on the Revenue website at http://www.revenue.ie/en/tax/lpt/sale-transfer-property.html and on the Law Society's website.

The liability date of 1 November in the preceding year and the obligation on the property owner on that date to pay any outstanding LPT on the sale of a property have been approved by the Oireachtas in passing the LPT legislation and I have no plans to change the law in either respect.

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