Revenue to assess bands if home sells for 15% more than estimate for LPT
If a home is sold for 15 per cent over its estimated value for the Local Property Tax, the vendor faces a Revenue assessment.
Rapidly rising values in Dublin and other urban centres mean an increasing number of sellers face such scrutiny, drawing attention to properties where the estimated value may have been understated.
Guidelines for sellers of residential property published by Revenue state if a home increases in value by greater than 15 per cent of the estimated value declared by the owner for property tax, they face a new valuation on the sale of the house.
Revenue will only provide clearance to sellers if they can show the valuation placed on their property on May 1st last year, when the tax was introduced, was made in good faith and is broadly accurate. Upward revisions can be backdated to that date.
Figures published last month by Revenue show there were 3,900 properties where the owner had self-corrected upwards their valuation band, and in 20 per cent of cases the increase had been by three valuation bands or more.
Most of these corrections were lodged in advance of sales, according to Ann Looney, principal officer at the Local Property Tax business unit. Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same.
Some residential property values have increased by up to 25 per cent in the last year.
Revenue is advising house sellers to contact them as soon as the sale is agreed in order to establish whether they need to amend the property tax charge, otherwise it could lead to delays in closures.
One home-owner contacted The Irish Times to say the value of their property had risen from Band 6 (€300,001-€350,000) to Band 10 (€500,001- €550,000). When the sale of the house was agreed a month ago, the vendor contacted Revenue to pay the remainder of Band 6 monthly repayments amounting to €585 for 2014. They were then informed the sale of the house could not close because the sale price was more than 15 per cent higher than the Local Property Tax estimate a year earlier.
The vendor became liable for €945 at the higher rate. In addition, the charge was backdated to May 1st last year, when a half-year charge was incurred. In all the seller was charged an additional €540. Revenue said it does not comment on individual cases.
According to Simon Stokes of the Society of Chartered Surveyors Ireland, the Local Property Tax valuations were only ever an estimate while the liability lies in the true value of the property, similar to how the self assessment tax system operates.
Source: The Irish Times