Question to the Minister for Finance (Mr Michael Noonan, TD)
To ask the Minister for Finance the reasons that the liability date for local property tax is in November of the preceding year; if there is a procedure for dealing with the anomaly created when a property is sold between the liability date and date when the tax is due and the former owner remains liable for the local property tax; if he will consider rectifying this situation; and if he will make a statement on the matter. – Jerry Buttimer.
For WRITTEN answer on Tuesday, 26th November, 2013.
I propose to take Questions Nos. 157, 161, 182 and 200 together.
In accordance with the Finance (Local Property Tax) Act 2012 (as amended), liability for Local Property Tax (LPT) will arise where a person owns a residential property on the liability date, which was 1 May 2013 for 2013 and for subsequent years, 1 November in the preceding year. The matter of the 1 November liability date has been raised and responded to several occasions in the House previously and, as far back as 27 March this year, in a reply to Question No. 110 on that date, I specifically addressed the fact that where a liable person sells their residential property between 2 November 2013 and 31 December 2013, provided that they owned the property on 1 November 2013, they will be liable to pay LPT on that property for 2014.
I have also informed the House in my replies to Questions Nos. 221 [49518/13] and 223 [49556/13] on 19 November 2013 that having a liability date before the year commences is preferable as there is certainty about who the liable person is for the coming year, that person has a reasonable amount of time to make the necessary provisions and they have access to the widest possible range of options for paying the tax. In particular, the liable person can put the required arrangements in place to ensure that phased payments by way of direct debit or deduction at source from employment, occupational pension or from certain Government payments would commence from January 2014 and would spread payment of the full LPT liability evenly over the course of 2014.
For a tax such as LPT to function properly, the legislation must specify a liability date for the tax to have application for a particular year. Whatever date is prescribed the question of liability when there is a change of ownership has to be managed, and I expect that the LPT liability involved is likely to be factored in during negotiations between the parties on the sale price and the closing date of a particular contract.
I am advised that detailed guidance on LPT issues arising in the context of the sale or transfer of a residential property was prepared by the Revenue Commissioners in consultation with the Law Society and is available on the Revenue website at http://www.revenue.ie/en/tax/lpt/sale-transfer-property.html since last August.
As to whether an anomaly has been created when a property is sold between the liability date and the date that the tax is due, an individual selling a property will often be purchasing another property at around the same time. While a vendor who owns a property on 1 November 2013 is liable for the 2014 LPT on that property, if s/he does not purchase another property before 1 November 2013 s/he will not be liable for the 2014 LPT on that “replacement” property – whoever is the owner as of 1 November 2013 will be liable.
Finally, the liability date for 2014 of 1 November 2013 is settled and has been approved by the Oireachtas in passing the LPT legislation and I have no plans to change the provision in question.