LPT split between seller/buyer for mid-year sale?

Selik

Myself and girlfriend are currently in the process of buying a house at the moment and we are being asked to pay for most of the LPT for 2016, with it being split proportionally between us and the seller.

Obviously this is technically fair however this is now another unforeseen expense of almost €500 which is eating into our rapidly depleting furniture etc funds.

We had (possibly incorrectly) assumed that the LPT should be settled for the year by the seller as the house is owned by them now and when the payment was due.

Are they just chancing their arm here?

The Revenue website seems to indicate so:

Sale / transfer of ownership of residential property

For Local Property Tax (LPT) purposes, the liability date for 2016 is 1 November 2015. Whoever owns the residential property on that date will have to pay the tax for 2016. If you (as an owner) sell or transfer ownership of your residential property after 1 November 2015 you will be liable to pay LPT on the property for 2016, even if it is sold or transferred before the end of 2015. The 2016 LPT charge should be paid in full at the time of the sale (or transfer of the property to the new owner)

mickoneill31

Giles wrote: »

My and girlfriend are currently in the process of buying a house at the moment and we are being asked to pay for most of the LPT for 2016, with it being split proportionally between us and the seller.

Obviously this is technically fair however this is now another unforeseen expense of almost €500 which is eating into our rapidly depleting furniture etc funds.

We had (possibly incorrectly) assumed that the LPT should be settled for the year by the seller as the house is owned by them now and when the payment was due.

Are they just chancing their arm here?

I'd say they're chancing their arm. If you buy a car and it has 6 months car tax left on it you don't get a second bill for the remaining tax. The assumption that I'd make is that this is factored into the price.

matrim

Giles wrote: »

My and girlfriend are currently in the process of buying a house at the moment and we are being asked to pay for most of the LPT for 2016, with it being split proportionally between us and the seller.

Obviously this is technically fair however this is now another unforeseen expense of almost €500 which is eating into our rapidly depleting furniture etc funds.

We had (possibly incorrectly) assumed that the LPT should be settled for the year by the seller as the house is owned by them now and when the payment was due.

Are they just chancing their arm here?

The Revenue website seems to indicate so:

Sale / transfer of ownership of residential property

For Local Property Tax (LPT) purposes, the liability date for 2016 is 1 November 2015. Whoever owns the residential property on that date will have to pay the tax for 2016. If you (as an owner) sell or transfer ownership of your residential property after 1 November 2015 you will be liable to pay LPT on the property for 2016, even if it is sold or transferred before the end of 2015. The 2016 LPT charge should be paid in full at the time of the sale (or transfer of the property to the new owner)

Whatever you do I wouldn't give anything until I had the keys in my hand. If the sale falls through you want to make sure you haven't paid it and then can't get it back

Cathmandooo

Seems to be the norm, that's how it was for me. Paid the previous owner for our portion of the LPT for the year. It seemed ridiculous to me too, very petty considering some things we let slide on the purchase, but the solicitors insisted, it wasn't something that the previous owner thought up, the sale wouldn't close until the money was paid.

Marcusm

I think the Law Society issued a practice note or updated standard conveyancing conditions to provide for this method of allocation. It's truly a matter of negotiation as the liability has already been settled but I doubt that you'll find your solcitor anxious to engage in the discussion.

wench

From Revenue's point of view, yes it is the owner on a particular date who is liable.

However the Law Society decided to add a standard clause to contracts that the lpt would be apportioned between vendor and buyer, similar to how management fees for apartments already are.
You can try to renegotiate the clause, or refuse to sign with it there, but the vendor doesn't have to accept and the sale may fall through.

https://www.lawsociety.ie/Solicitors/Practising/Practice-Notes/Local-Property-Tax/#.VxdRCTGfh9Y

MarkAnthony

Standard, we had to pay it. You can negotiate if you think you're in a strong enough position.

Rew

Totally normal this is what we had to do

Selik

Ok grand thanks for all the responses, I think we will just pay it as it seems fair and also the done thing - just wish we had known and it wasn't a surprise but that's the nature of the conveyancing beast we have come to learn.

Onwards!

Rew

Giles wrote: »

Ok grand thanks for all the responses, I think we will just pay it as it seems fair and also the done thing - just wish we had known and it wasn't a surprise but that's the nature of the conveyancing beast we have come to learn.

Onwards!

Your solicitor knew from the start but I think most of them like to treat their clients like mushrooms...

Uriel.

Just to say, for what is it is worth, it was on our final bill from the solicitor also - his fees, land registry fees, sundries, reimbursement of LPT, balance of purchase of monies. Again, we weren't told about it in advance, but didn't argue the point either. It was about €115 for us if I recall correctly, and it wasn't worth quibbling over as we had a tough time finalising the purchase.

tuisginideach

Why would the vendor pay the LPT for the rest of the year when he doesn't own the property? Normally the vendor / vendor's solicitor pays the outstanding LPT (Must be paid up pre-sale or sale won't go through) and the buyer/buyer's solr pays the outstanding amount for the year to the vendor's solr at close of sale.

That's why I pay by direct debit so that it is absolutely clear in days pre-closure of sale how much is outstanding.

Carawaystick

tuisginideach wrote: »

Why would the vendor pay the LPT for the rest of the year when he doesn't own the property?

Because it's the law?
Who ever owned the land on the first of November last year is liable for the tax for this year, even if they sold it in November or December last year.

Baby01032012

It is arguable. Solicitors who are executing the purchase/sale go by the law society rules which say it should be split proportionately based on date ownership changed hands.

However it is a tax, and as previous posters have said the revenue rule is the person who owns it on 1/11 is liable.

However law society normally prevails because the solicitors are dealing with it.

I made a purchase 2 years ago where the seller just paid it. I've a purchase coming up where I might argue but the amount is relatively small.

Adoolan85

We closed on our house 2nd week in January and LPT was never mentioned.

Guess we were just lucky.

tuisginideach

Probably because monthly direct debit payments began 15th January so vendor had finished her/his year.

Selik

Adoolan85 wrote: »

We closed on our house 2nd week in January and LPT was never mentioned.

Guess we were just lucky.

How do you know it's been paid for 2016 then?

If you sell a car a week after taxing it you wont be entertained adding on the extra cost of the tax to the price (and its often a lot more than the cost of the LPT to tax a car) so why would it be any different for a house.

I would refuse to pay anything extra for LPT if it were me buying the house.

Gumbo

Standard practice with LPT.
also if you had of been buying a house with management fees, the are proportioned out also and you would have to pay that portion to the seller also.

maryjayne

I purchased my house on the 15th December and the seller refused to pay the LPT for 2016 even though I had agreed that I would reimburse him and his solicitor advised him that this was normal practice. I contacted Revenue who said the liability was his and they would pursue him for it if not paid.

Rew

maryjayne wrote: »

I purchased my house on the 15th December and the seller refused to pay the LPT for 2016 even though I had agreed that I would reimburse him and his solicitor advised him that this was normal practice. I contacted Revenue who said the liability was his and they would pursue him for it if not paid.

I wonder was the sellers objection political more than financial

HelgaWard

It was mentioned by our solicitor in our case when we bought & sold last year. We didn't request the proportion from the people buying our house and the people we were buying from did not request it from us.

MrDerp

Our solicitor brought it up on closing. It seems to be the done thing.

I didn't object as the solicitor had already done a thorough job of making the vendor pay back tax on underdeclared property tax (declared value was miles from selling price) along with forcing an NPPR payment when exemption couldn't be proven by the previous owner, who turned out to be a non-resident landlord.

Since my solicitor protected me from a potentially significant transfer of liability on our new home, I didn't kick up any fuss over the pro-rata reimbursement of property tax. He also didn't bill it until closing, ensuring that we didn't pay for any days before that date when the vendor was slow in completing.

I think it makes sense for the law society to have drawn up best practice as conveyancing is a low margin game so why would they want to be getting into squabbles about a few quid.

Enjoy your new home, OP! These things will be long forgotten in a couple of years, when you actually feel like you have money again

o1s1n

I bought a house in 2013, sold it in December just gone and bought another property this year.

In all three instances the LPT was proportionally refunded. Seems to be the done thing alright.

Speaking of LPT, came across a weird issue when selling the house. The original owners had put it into the 200-250k bracket and paid that when the LPT system first came out. We bought it from them for 270k the following year.

They didn't get an exemption to keep it in the original bracket though when selling the house.

So technically the whole time period I owned the property (was only two years) it was in the incorrect LPT bracket.

When I then went to sell the property, Revenue got on to me stating that I couldn't do so until the LPT issue was sorted.

To make matters worse, I couldn't amend to the higher LPT level on the website as this needed to be done by the person who owned the house at the original valuation time.

This all came out literally the week we were closing. Thankfully my solicitor was able to get on to Revenue and sort out the whole debacle, but it caused a stupid amount of stress over something which only amounted to under 100 quid.

Adoolan85

Giles wrote: »

How do you know it's been paid for 2016 then?

That's irrelevant in any case as I was not liable to pay when the tax was due.

Vendor can be reimbursed as condition of sale but they're hardly going to come cap in hand 3 months later.

Home free.