Understanding the implications of property tax

Q: I own my own home and my elderly mother lives in a purpose built annexe on the grounds of my property. During the property boom I purchased a city centre apartment, which I rent out to students. I also have a mobile home by the sea, which we use for family holidays. How will the new property tax affect me?

A: The Local Government (Charges ) Act 2009 was introduced in July of this year. The act introduces a €200 annual property charge on residential properties, which are not the owner’s principal private residence. The act is aimed in particular at private rental properties, vacant properties and holiday homes.

The charge applies to each property owned and is payable to the local authority of the area in which the property is located.

Exemptions and reliefs

While the scope of the act is far-reaching, not all residential properties are subject to the tax. The most notable exception is your principal private residence, ie, the property you reside in.

Other properties which are exempt from the property charge are as follows:

• Properties which have never been sold or used as a residence.

• Specified social housing.

• Properties falling within the rental accommodation scheme.

• Specified heritage buildings.

• Properties held (usually by developers ) that have not been sold or used yet as a residence.

The act also provides for relief for situations which may result in an individual temporarily owning two properties; for example, when moving house or in the course of a divorce or separation.

If an individual has an interest in two properties as a result of moving home, he/she will initially be required to pay the charge in respect of one of the properties. However, where the property is disposed of within six months of the liability date you can apply to their local authority, in writing, for a refund of the tax paid.

If an individual has an interest in two properties as a result of divorce or separation, the act provides that they are not liable for the charge in respect of any interest they retain in the former family home.

Granny flats and elderly relatives

The legislation provides for an exemption for “granny flats” and similar buildings, where certain conditions are met.

• The property must be occupied by a relative of you or your spouse.

• It must be provided rent free.

• It must be within two kilometres of your own residence.

From the information provided, it appears that the property occupied by your mother will meet the requirements for the exemption and will not be subject to the charge.

You should also be aware that if your mother originally left her principal private residence due to long term mental or physical infirmity, and she still owns that property, it will be exempt from the charge irrespective of what use it was put to afterwards. The main condition is that she does not own the property in which she now lives.

Rental properties and holiday homes

Rental properties and holiday homes, but not mobile homes, are subject to the charge. Based on the information you provided, you will only be required to pay the charge on the city centre apartment.

Registering and paying the charge

The charge is collected by the county or city council responsible for the area in which the property is located, although payment must be made out to “LGCSB NPPR” and not the local authority. The charge is payable on property owned on the liability date, July 31 2009. The charge must be paid by September 30 2009, although there is a month’s grace up to October 31 2009. If the charge is not paid within the two month time frame, it will be subject to a late payment fee, which is €20 for each month or part of a month that the payment is late.

The charge can be paid online by registering at www.nppr.ie or, alternatively, you can go to your local council office to make your payment.

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