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Local Property Tax Changes

By: David Ryan | Posted on: 27 Feb 2018

Local Property Tax Changes

The general clearance thresholds for Local Property Tax have increased with effect from 1st September 2017.   This is the first increase in the general clearance thresholds since November 2015 and it has the effect of reducing the number of cases requiring specific clearance for the purpose of closing property sales.   The thresholds reflect the increase in property prices.

Where at least one of four specified conditions apply at the date of sale, a Purchaser can safely be assured that the Revenue accepts that there is no Charge on the property in respect of unpaid LPT liabilities where it establishes after the sale that a Vendor has underdeclared his or her LPT liability.

In summary, the main provisions of the Clearance Guidelines are as follows:

  • The general clearance valuation limit has been changed to reflect an increased limit from €300,000 to €350,000.  In practical terms, where a property is sold for €350,000 or less, general clearance will apply regardless of the valuation band the vendor placed the property in for payment of LPT.
  • Allowable valuation margin. This condition relates to the allowable margin by which the sales price of a property exceeds the valuation band that was declared for the property in relation to the 1st May 2013 valuation date.  The allowable margins have been changed as follows;
    • From 50% to 80% in Dublin City and County and from 25% to 50% for all other properties.  In other words, where the sale price of a property is not more than 50% (80% for properties in Dublin city and county) higher than the upper limit of the valuation band declared, general clearance will apply even if the property is sold for more than €350,000 and;
    • In the case of properties for which the declared chargeable value exceeds €1,000,000 where the sale price is not more than 50% (80% for properties in Dublin city and county) higher than the chargeable value.
  • Expenditure on enhancements to a property. Where the sale price exceeds the valuation band declared, that any such excess must be within the specified margins set out in condition 2 above, adjusted by the amount of any verifiable expenditure on refurbishment or improvement incurred since 1st May 2013.
  • The existing guidelines on the sale of comparable properties in the area was not revised.  If you can show evidence of the sale of comparable properties in the area for an amount within the valuation band in which the property was placed within nine months prior to 1st May 2013, you can seek clearance from the Revenue to approve the valuation band that the subject property was placed in, notwithstanding that it does not fall within the general clearance provisions at 1-3 above.
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