The legislation governing the administration of Local Property Tax (LPT) provides for a number of exemptions from LPT, two of which are particularly relevant to those who purchased a residential property during 2013. Firstly, under section 9 of the Finance (Local Property Tax) Act 2012 (as amended) any new and previously unused residential property that was purchased from a builder or property developer between 1 January 2013 and 31 October 2016 will be exempt from LPT up to the end of 2016. The second relates to the exemption under section 8 of the 2012 Act (as amended), which is the exemption to which the deputy refers. It was originally intended that this exemption would only apply to first-time buyers, which is clear from the heading to the section: "Exemption for first-time buyers". The Explanatory Memorandum to the Bill (prior to enactment) also states that the exemption applies to first-time buyers. The Deputy may recall that mortgage interest relief was phased out on mortgages taken out after 31 December 2012 and this measure was a transitional provision to help first-time buyers in the first year after the abolition of mortgage interest relief.
However, as written, the exemption benefits any buyer, not just a first-time buyer. The result is that a person who purchased a second hand house in 2013 and occupies it as a sole or main residence is entitled to the exemption under section 8 regardless of whether she or he is a first-time buyer. The exemption will apply up to the end of 2016, provided the purchaser does not sell or otherwise transfer ownership of the property and continues to live in it as his or her sole or main residence. Accordingly, there will be some occasions where a purchaser of a second hand property in 2013 will not qualify for the exemption, for example, where the property is being let by the purchaser. The Deputy's assertion that all buyers of residential properties in 2013 will now receive an exemption from LPT is therefore not correct.
Revenue has advised me that the section 8 exemption applies to a clearly defined group of property owners, who are being identified using Stamp Duty records. These fall into three broad groups:
- those who purchased a residential property between 1 January 2013 and 1 May 2013 and paid the 2013 LPT liability. These purchasers may be entitled to a refund of the 2013 payment and, subject to certain conditions, may be exempt for 2014 to 2016 LPT,
- those who purchased a residential property between 2 May 2013 and 1 November where the purchaser paid the 2014 LPT liability. These purchasers may be entitled to a refund of the LPT for 2014 and, subject to certain conditions, may be entitled to an exemption for 2015 and 2016 LPT, and
- those who purchased a residential property between 2 November 2013 and 31 December 2013. These purchasers, subject to certain conditions, may be entitled to an exemption for 2015 and 2016 LPT.
There is a significant amount of work involved in identifying individuals who bought in 2013 and who may be entitled to claim the exemption. When this work is completed Revenue will write to these individuals and will provide advice on what action should be taken where the individual confirms that she or he qualifies for the exemption and wishes to claim it. Good progress is being made on identifying those who may be eligible and the letter from Revenue will clearly indicate what the purchaser will need to do to claim the exemption.
Regarding the potential impact on the Exchequer, as a result of the increased number of purchasers who will qualify for the section 8 exemption, the potential loss is not likely to be significant as part of the overall LPT yield. Revenue has advised that an accurate figure will only be available when those who receive the letter from Revenue respond by claiming the section 8 exemption for 2013 and/or 2014, as appropriate. Revenue expects to be in a position to provide indicative figures during April 2014.
In relation to the potential impact on the LPT yield for 2015 and 2016, Revenue advises that reliable figures for these years will only become available after 2014 as qualification for the exemption will be conditional on the individual continuing to satisfy the exemption conditions. In this respect, Revenue has advised that where an owner lets or sells his or her property the exemption will cease to apply from the next liability date.