Dáil Éireann Debate, Wednesday - 27 May 2020
37. Deputy James Browne asked the Minister for Finance if he is satisfied with the process in cases in which property owners that sell their homes must pay the local property tax for the full year; and if he will make a statement on the matter. [7326/20]
Amharc ar fhreagraI am advised by the Revenue Commissioners that liability for local property tax for a particular year is to be established on a single date. This is a statutory requirement contained in sections 3 and 16 of the Finance (Local Property Tax) Act 2012 (as amended). Section 2 of the Act defines the "liability date" of a given year as the 1 November of the preceding year.
Liability for Local Property Tax (LPT) arises where a person owns a residential property on a liability date, which for 2014 and subsequent years is 1 November. Thus, liability for the year 2020 was established on 1 November 2019 and the person who was the liable person in relation to a property on this date is required to pay the LPT liability for the full year 2020, regardless of whether the ownership of the property changes during that year and before the following liability date of 1 November 2020 (for the year 2021). However, while liability is to be established on 1 November in a year, the LPT does not have to be paid until the following year.
There are good reasons why liability is established before the start of the relevant year and why the tax charge is not apportioned over a year between two different owners where a property is sold during a year. Having a single liability date provides certainty about who is responsible for payment and avoids disputes about the number of days for which different property owners might be liable. The period between the liability date at the beginning of November and the end of a year, allows the taxpayer time to put different types of phased payment arrangements in place for the following year such as direct debit or deduction at source from a person’s salary or occupational pension.
In many cases where a property is being sold, the seller is also purchasing a replacement property around the same time. While such a person may end up having to pay LPT in respect of the property being sold, the LPT for the property being purchased is likely, depending on the date of sale, to end up being paid by the previous owner. The net result for each party to the sale is the payment of LPT on a single property. Furthermore, now that LPT has become an established tax it has become common practice, as part of sale/purchase negotiations, for sellers and purchasers of residential properties to take the ongoing LPT liability of the seller into account and to adjust the sales price accordingly so that, in effect, the purchaser ends up paying the LPT liability for the part of the year for which he or she owns the property.
