Here are the new changes to the Local Property Tax

THE GOVERNMENT HAS signed off on changes to prevent a jump in the amount of Local Property Tax (LPT) being paid by the majority of homeowners. 

The changes will mean that most homeowners will remain in their present valuation bands, despite continued rising house prices across the country.

The Local Property Tax is an annual charge on all residential properties in the State which came into effect in 2013. Essentially, if you own a residential property you must pay the tax.

The amount you pay is based on the value of your property, which is self-assessed. There are 19 different bands to cover increasing property values.

The next valuation date for LPT is due to take place on 1 November this year, as legislation provides for a revaluation every four years.

Finance Minister Paschal Donohoe this morning informed Cabinet that if this revaluation goes ahead without any amendments to the bands or rates, around 70% of properties would move up at least one band of LPT. 

This would result in a significant increase in tax due for most homeowners. 

The General Scheme of Finance (Local Property Tax) (Amendment) Bill, which was approved by Cabinet this morning, will see the valuation bands widened by 20%, while a new base rate of 0.0906% will apply – down from 0.1029%.

The Department of Finance said that this will ensure that a predicted 96% of homeowners will remain in their existing band.

The new bands are as follows: 

Those with properties valued at €525,000 or lower will pay between €5 and €25 extra a year, while properties above that value, or properties which move up a band, will see a higher increase in their LPT charge.

Fixed LPT charges will increase by between 5% and 6% for properties valued under €1.26 million.

Properties valued at between €1.26 million and €2.1 million will see a rate of 0.25% charged, while there will be a 0.3% rate applied on properties valued at over €2.1 million.  

Local authorities will now be able to vary LPT upwards by up to 25%, but the maximum they can vary downwards by will remain at 15%.

“By asking property owners to contribute a small amount more than they do at present, LPT is projected to yield in the realm of €45 million or 8% in additional funding for local authorities, which will go towards local services,” Donohoe said this morning.

The Minister said asking people to pay more LPT is “a way in which we can ensure that Local Property Tax continues to pay more in the years ahead and contribute more to our tax collection, but doing so in a way that aims to be affordable for those who are paying it”.

“I’m making this argument conscious of the fact that prices are still high for very many and the cost of living still matters to households that will be asked to pay,” he said. 

The Government is currently considering exempting detached cabins and modular-style buildings placed at the end of gardens from planning rules. 

Asked if property owners who choose to build a modular home on their property could face a higher rate of tax, Donohoe said that is the case. 

“If any change takes place in a property adjacent to a home that affects the value of the property overall, that has to be included in the valuation that you self assess, your Local Property Tax,” he said.

“That remains the case. So it could, for example, influence where somebody is in the band by which they then calculate the Local Property Tax.”

He said the change in relation to cabins or structures in a property “is consistent with the Local Property Tax”.

“The way the Local Property Tax is based is you have to give a valuation on everything that is contained within your property, and any measures to put in place additional accommodation within that property are consistent with how the Local Property Tax is calculated.”