Many people selling and buying houses recently have been left bewildered by the stance taken by Revenue regarding the payment of Local Property Tax (LPT), in particular for 2014.
The Finance (Local Property Tax) Act 2012 (‘the Act’) provides that the owner on 1st November 2013 is the person liable to pay LPT for 2014 – even if that person is selling the property before the end of this year and will not own or occupy the property at any time during 2014.
The Act provides that a sale of a property after the liability date for the 2014 tax (1st November 2013) brings forward payment of the 2014 tax. For sales closing before the end of 2013, therefore, the vendor must pay the tax for 2014 before closing the sale. Revenue has confirmed there will be no refund of the 2014 tax by Revenue to the vendor.
A contract for sale may contain a special condition by which the purchaser and vendor agree that the tax will be apportioned (as was recommended by the Conveyancing Committee in its practice note in the June 2013 Gazette). In such cases, the tax is apportioned in accordance with the contract. Revenue has confirmed that there will be no refund of tax to purchasers who pay apportioned LPT to a vendor.
Because of the publication in early November of the widening of what was previously thought to be an ‘exemption’ only for first time buyers (during 2013 of second hand residential property for owner occupation) to all purchasers of such property during 2013, many vendors and purchasers find themselves in situations that they had not previously anticipated.
No doubt Contracts for Sale being drafted going forward will be very carefully worded to cover the payment of LPT for 2014. For those who find themselves bound into Contracts for Sale which were signed and exchanged prior to the above publication, legal advice should be sought, as the issue of payment of LPT very much depends on the wording of the Contract in each case.
Shane Dowling is the principal of Direct Law Solicitors in Skerries and Swords, and provides legal services to all of the North County Dublin area. Direct Law’s services include conveyancing, personal injury litigation, wills and probate, personal insolvency and commissioners for oaths.