The Finance (Local Property Tax) Act 2012 (LPT Act) as amended does not make specific provision for an exemption, reduction or deferral from Local Property Tax (LPT) for property owners with long-term illness. The Government decided upon the introduction of the Local Property Tax (LPT) that a liability to the tax should apply to all owners of residential properties with a limited number of exemptions and no deductions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. However, individuals with long-term illness may be eligible for an exemption, reduction or deferral in accordance with the existing provisions of the LPT Act, which inter alia provides for certain properties to be exempt from LPT where they meet certain qualifying conditions. There are two exemptions from LPT that may be of relevance for those who have a long-term illness.
Section 5 provides for an exemption from LPT where a person is unable to continue living in his or her sole or main residence as a result of a mental or physical infirmity, where that infirmity has been certified by a medical practitioner. The exemption applies where a person has vacated his or her property for a period of 12 months or longer, or where a person has vacated his or her property for a period of less than 12 months if a registered medical practitioner is satisfied that the person is unlikely to ever resume occupation of their property.
In addition, section 10B provides for an exemption from LPT for properties which are purchased, adapted or built for use by an incapacitated individual, where certain conditions are satisfied. For the purposes of section 10B, “incapacitated individual” takes its meaning from section 189A of the Taxes Consolidation Act 1997 and means an individual who is permanently and totally incapacitated, by reason of mental or physical infirmity, from being able to maintain himself or herself. While not specifically defined in the legislation, the phrase “being able to maintain himself or herself” refers to being able to support oneself by earning an income from working.
Section 15A of the LPT Act also provides for relief from LPT by way of a reduction in the chargeable value of a residential property where it is adapted to make it more suitable for use by a disabled person. Disability, in this context, takes its meaning from Section 2 of the Disability Act 2005, which refers to a substantial restriction in the capacity of a person to carry on a profession, business or occupation in the State or to participate in social or cultural life in the State by reason of an enduring physical, sensory, mental health or intellectual impairment.
To qualify for the reduction, the property must be occupied by a disabled person as his or her sole or main residence following its adaptation, and the adaptation must have the effect of increasing the market value of the property. Where the qualifying conditions are met, the chargeable value of the adapted property is reduced each year by a fixed amount of €87,500. Unless the valuation of a residential property places that property in the first property band (properties valued at less than €200,000) or the property is subject to LPT on its market value (as its market value is in excess of €1,750,000), this will have the effect of bringing a property into a property band one lower than it should be, thereby reducing the LPT liability.
The relief provided for by section 15A should not be confused with the full exemptions from LPT that are provided by sections 5 and 10B. If a person satisfies the conditions to qualify for an exemption, then they do not have a liability to LPT. However, if a person satisfies the conditions to qualify for relief under section 15A, they remain liable to LPT.
Where a liability to LPT does arise, property owners who are struggling to pay the liability may qualify for a full or partial deferral of their liability on a property in which they live if their income is below a certain limit. To qualify for a full deferral, the thresholds are €18,000 for a single person and €30,000 for a couple. The income limits to qualify for a partial deferral are €30,000 for a single person and €42,000 for a couple. A partial deferral is a deferral of 50% of the liability. In addition, the income thresholds can be increased by an amount equal to 80% of the gross mortgage interest payments on any outstanding mortgage on the property subject to certain conditions.
It is also possible to apply for a deferral on the grounds of hardship if a person suffers an unexpected and unavoidable significant loss or expense as a result of which a person cannot pay their LPT liability without suffering financial hardship. This category applies to persons who do not qualify for a deferral based on their income. It is important to note that where an LPT liability is deferred, it still remains payable and interest at a reduced rate of 3% per annum will accrue on the outstanding amount until it is paid. Where a deferral is in place, the outstanding liability automatically attaches as a charge on the property and must be paid before a sale or transfer of the property can be completed.
Where a liable person does not qualify for or does not wish to avail of a deferral, there are a wide number of phased payment options available to assist with budgeting. The various options are designed to provide the maximum possible flexibility for individual circumstances.
Further information and guidance on the exemptions and relief mentioned above, as well as deferral and payment options, can be found on the Revenue website at: www.revenue.ie/en/property/local-property-tax.
