This summer, Finance Minister Paschal Donoghue announced amendments to Local Property Tax in Ireland. The new regime requires action from almost all homeowners across the county, and may have an impact on how much you pay. What exactly are these changes and how do they affect you? Here is everything you need to know about the updated Local Property Tax rules.
What is Local Property Tax?
Abbreviated to LPT, Local Property Tax was introduced in Ireland in 2013. It is a self-assessment tax that must be paid annually by anyone who owns a residential property (even if you do not live there).
The tax that is due depends on your own assessment of the market value of your property according to Revenue guidelines. This value fits into one of 20 different LPT bands each with their own standard rate of tax.
Until recently, both the bands and the rate of tax had been exactly the same since LPT was introduced. However, this year the ranges of each band have been amended to reflect the increase in property values.
The New Band Structure
In the table below, you can see a comparison of the previous valuation bands against the new structure along with their associated charges.
Previous Band Structure | Updated Band Structure | |||
Band | Property Value (€) | Charge (€) | Property Value (€) | Charge (€) |
1 | 0 – 100,000 | 90 | 1 -200,000 | 90 |
2 | 100,001 – 150,000 | 225 | 200,000 -262,500 | 225 |
3 | 150,001 – 200,000 | 315 | 262,501 – 350,000 | 315 |
4 | 200,001 – 250,000 | 405 | 350,000 -437,500 | 405 |
5 | 250,001 – 300,000 | 495 | 437,501- 525,000 | 495 |
6 | 300,001 – 350,000 | 585 | 525,001-612,500 | 585 |
7 | 350,001 – 400,000 | 675 | 612,501 – 700,000 | 675 |
8 | 400,001 – 450,000 | 765 | 700,001- 787,500 | 765 |
9 | 450,001 – 500,000 | 855 | 787,501 – 875,000 | 855 |
10 | 500,001 – 550,000 | 945 | 875,001 – 962,500 | 945 |
11 | 550,001 – 600,000 | 1,035 | 962,501 – 1,050,000 | 1,035 |
12 | 600,001 – 650,000 | 1,125 | 1,050,001 – 1,137,500 | 1,190 |
13 | 650,001 – 700,000 | 1,215 | 1,137,501 – 1,225,000 | 1,409 |
14 | 700,001 – 750,000 | 1,305 | 1,225,001 – 1,312,000 | 1,627 |
15 | 750,001 – 800,000 | 1,395 | 1,312,501 – 1,400,000 | 1,846 |
16 | 800,001 – 850,000 | 1,485 | 1,400,001 – 1,487,500 | 2,065 |
17 | 850,001 – 900,000 | 1,575 | 1,487,501 – 1,575,000 | 2,284 |
18 | 900,001 – 950,000 | 1,665 | 1,575,001 – 1,662,500 | 2,502 |
19 | 950,001 – 1,000,000 | 1,755 | 1,662,501 – 1,750,000 | 2,721 |
20 | Over €1m |
| 1,750,001+ | 2,830+ |
As you can see, the number of valuation bands has remained the same. However, the limits of the bands have been increased and they have widened by 75%. As for the actual rate of tax, this has been cut across most bands from 0.18% down to 0.1029%.
What does this mean for me?
The changes to LPT mean that all property owners in Ireland must submit a valuation of their property based on the new bands by 1st November 2021. After that, you will need to review this valuation every 4 years (as opposed to the 3 years stipulated by previous guidelines).
Even though property prices have gone, this does not necessarily mean that you will pay more LPT. As noted above, the rate of tax has actually gone down across most bands, while the value on which your LPT is calculated has increased. Because of this, the Department of Finance has estimated that 54% of property owners will see no change in their LPT liability, while 11% will even see a decrease.
That leaves 36% of property owners with a bigger LPT tax bill. However, for most people the change won’t be too significant. For 97% of those who see an increase in liability, it will amount to less than €100 a year.
The new changes will also mean that some properties previously exempt from LPT will now be liable for the tax. This mostly affects homeowners with properties built after 2013, who must now submit a valuation and pay their annual charge. It is estimated that this will add around 100,000 properties into LPT. There are still a few exemptions, which are outlined by Revenue here.
How do I value my property?
LPT is a self-assessed tax, meaning you need to calculate your own liability. However, Revenue provides through guidelines to help you find the correct valuation band, which you can find here.
The valuation tool takes into account average values for property in your area along with specifics of your own property. If you use any supporting documentation to determine the market value of your property, make sure to keep it on hand. Revenue may request this from you in the event of a review of your self-assessment.
You may also want to see our tax tips for landlords as well as our property tax guide for non-residents.
What about properties over €1,750,00?
Homes valued in band 20 do not have a fixed charge. Instead, you will need to declare an actual valuation of the property. Using a property valued at €1,750,00 as an example, you can see how the LPT will be reached below.
The LPT is reached using three calculations. First, find 0.1029% of the first €1.05 million of declared market value of the property (0.10% of 1,050,000 = 1,080).
Then you must add 0.25% of the portion of the declared market value between €1.05 million and €1.75 million. For a property valued at €1.75 million this portion is €700,00 (1,750,000 – 1,050,000). 0.25% of 700,000 = 1,750.
Finally, you must add 0.3% of the portion of the declared market value above €1.75 million. In this example, nothing else needs to be added. So to reach an estimate of LPT, you add together the first two calculations. This leaves you with 1,080 + 1,750 = 2830.
Here are the calculations in a table if you find that easier to work with.
House Value | €1,750,000 | |
0.10% | €1,080 | (0.1029% of the first €1.05 million of declared market value of the property) |
+ | ||
0.25% | €1,750 | (0.25% of the portion of the declared market value between €1.05 million and €1.75 million) |
+ | ||
0.30% | 0 | (0.3% of the portion of the declared market value above €1.75 million) |
= | ||
LPT Estimate 2021 | €2,830 |
Conclusion
We hope this post has cleared up any confusion over the new LPT guidelines. However, if you have any questions we would be delighted to help. SCK Group can assist with both property valuations and filing your LPT return, ensuring your assessment and declaration are made accurately and on time. To get in touch, simply head over to our contact page and we’ll get back to you as soon as we can.
