Property tax liability purchasing Dec 2016

c montgomery

Just looking for opinions

We are sale agreed on a house with closing date looking like mid December.

Our solicitor has advised that even though the seller is liable for the 2017 property tax that we should cover it's cost and repay it to the seller.

I checked revenues website and its says whoever owns the house on 01Nov2016 is liable for 2017 property tax even if they sell it after this date. See below for quote from revenue.

Am I right to refuse to refund this to the seller? It seems pretty black and white that it's not my liability.
Puzzled as to why my solicitor is trying to cost me more money.


"Who is liable to pay LPT for 2017?
If you are the liable person for the residential property on 1 November 2016 you have to pay LPT for 2017. If you (as an owner) sell your residential property after 1 November 2016 you will be liable to pay LPT on the property for 2017, even if it is sold before the end of 2016."

Link http://www.revenue.ie/en/tax/lpt/lpt-obligations-2017.html

Rew

c montgomery wrote: »

Just looking for opinions

We are sale agreed on a house with closing date looking like mid December.

Our solicitor has advised that even though the seller is liable for the 2017 property tax that we should cover it's cost and repay it to the seller.

I checked revenues website and its says whoever owns the house on 01Nov2016 is liable for 2017 property tax even if they sell it after this date. See below for quote from revenue.

Am I right to refuse to refund this to the seller? It seems pretty black and white that it's not my liability.
Puzzled as to why my solicitor is trying to cost me more money.


"Who is liable to pay LPT for 2017?
If you are the liable person for the residential property on 1 November 2016 you have to pay LPT for 2017. If you (as an owner) sell your residential property after 1 November 2016 you will be liable to pay LPT on the property for 2017, even if it is sold before the end of 2016."

Link http://www.revenue.ie/en/tax/lpt/lpt-obligations-2017.html

Black and white, yes sure they have to pay it but apportioning the LPT so that each party pays for the period they live there is the fairest/simplest way to handle it and what happens in most cases. You have the right to refuse and they have the right to refuse to sell your the house if they want so depends which party feels stronger about it. I assuming no contracts are signed as of yet BTW?

April 73

It may be black & white in law but in practice it seems that solicitors are apportioning a share to the seller & the purchaser based on the proportion of the year that each will own the house.
Certainly happened in our case last year & it seemed like fair thing to do.

c montgomery

Personally I think it's ridiculous that solicitors are deciding to apportion costs when revenue has laid it out in black and white who is liable.

Revenue make the rules not solicitors.

Pkiernan

You should walk away from a multi hundred thousand euro purchase over a couple of hundred euro.

c montgomery

Pkiernan wrote: »

You should walk away from a multi hundred thousand euro purchase over a couple of hundred euro.

That's one way to look at it, why endanger the sale for a few hundred euro.

My view is why pay an additional few hundred to a seller who I'm already handing hundreds of thousands to for a liability that revenue has specified is his.

If I bought a second hand car I wouldn't pay any outstanding parking fines or pay back the portion of car tax that's still remaining.

exaisle

c montgomery wrote: »

That's one way to look at it, why endanger the sale for a few hundred euro.

My view is why pay an additional few hundred to a seller who I'm already handing hundreds of thousands to for a liability that revenue has specified is his.

If I bought a second hand car I wouldn't pay any outstanding parking fines or pay back the portion of car tax that's still remaining.

You're not paying the property tax to the owner....you're reimbursing him/her for the tax that he/she has already paid but which refers to your period of ownership. You should be responsible for your own taxes and not expect somebody else to pay them for you.

The motor tax situation has more to do with the inefficiency of the administration of motor tax here but because it's run by local authorities, inefficiency is to be expected. AFAIK, in the UK, the seller can reclaim motor tax if they sell a vehicle.

Parking fines are the responsibility of the owner at the time the fine was incurred. Why should you pay any outstanding fines? You're only liable for fines incurred during the period of your ownership. You should only be liable for motor tax incurred during the period of your ownership. Same with property tax. Sorry...you've just scuppered your own argument....

DubCount

Relative to the size of a house purchase, this is a small issue. However, I would agree that the LPT should be aportioned based on the time each party will have posession of the property. Although Revenue collect the tax based on who owns the property at 1st November, the tax relates to the whole of 2017.

If there was a charge for 2016 payable by whoever owned the property on 31 December 2016, do you think it would be fair for the purchaser to be left to pay the whole years charge if the house was purchased on say 15 December?

I dont think its like paying for the parking fines of a previous car owner. Its more like buying a car with car tax paid for the next year. Its worth a bit more than an identical car that doesnt have car tax already paid.

c montgomery

To give another example.
I sold an apartment last June which had an annual maintenance fee of 1600 euro which included refuse collections. I didnt go looking for the jul-dec portion of the fee from the purchaser. IMO that would be ridiculous even though it was far in excess of the property tax.

I think people are mistaking fairness with liability. There's no fairness when it comes to tax. In my case the seller is liable and revenue spell this out clearly on their website.

dubrov

c montgomery wrote:

I think people are mistaking fairness with liability. There's no fairness when it comes to tax. In my case the seller is liable and revenue spell this out clearly on their website.

It doesn't matter what revenue say. The seller can still pull out of the deal of they don't think the price is "fair".

Personally, I'd insist on it being shared unless i was desperate to sell

c montgomery

dubrov wrote: »

It doesn't matter what revenue say. The seller can still pull out of the deal of they don't think the price is "fair".

Personally, I'd insist on it being shared unless i was desperate to sell

It absolutely matters what revenue says, they make the rules/laws.

Sure they can pull out, wait weeks to get to this stage again with another buyer all the while paying a mortgage on a house their not living in.

I was the highest bidder, they can get the guy who offered 5k less to pay their property tax if they wish.

dubrov

c montgomery wrote:

Sure they can pull out, wait weeks to get to this stage again with another buyer all the while paying a mortgage on a house their not living in.

And they know you'd have wasted money on a surveyor, solicitor fees etc. It works both ways.

c montgomery

dubrov wrote: »

And they know you'd have wasted money on a surveyor, solicitor fees etc. It works both ways.

It certainly does and if revenue said I was liable I would pay it like I do every other tax.

I'll be taking a principle stand on this one I think.

Harvey Normal

c montgomery wrote: »

To give another example.
I sold an apartment last June which had an annual maintenance fee of 1600 euro which included refuse collections. I didnt go looking for the jul-dec portion of the fee from the purchaser. IMO that would be ridiculous even though it was far in excess of the property tax.

I think people are mistaking fairness with liability. There's no fairness when it comes to tax. In my case the seller is liable and revenue spell this out clearly on their website.

You should have asked for that money.

c montgomery

Harvey Normal wrote: »

You should have asked for that money.

Not the way it works with management fees. When I bought it I benefited, when I sold out lost out.

It should be the same with property tax. In fact it is the same according to revenue and the law.

Harvey Normal

c montgomery wrote: »

Not the way it works with management fees. When I bought it I benefited, when I sold out lost out.

It should be the same with property tax. In fact it is the same according to revenue and the law.

Well I paid pro rated management fees which made sense to me. The seller could well pull out since you haven't signed contacts.

exaisle

c montgomery wrote: »

It absolutely matters what revenue says, they make the rules/laws.

Sure they can pull out, wait weeks to get to this stage again with another buyer all the while paying a mortgage on a house their not living in.

I was the highest bidder, they can get the guy who offered 5k less to pay their property tax if they wish.

Firstly, revenue don't make they rules or the laws, the Oireachtas does. Revenue interpret the laws and are subject to challenge through the courts, and this happens quite often...and they by no means win every case!

Secondly, you were the highest bidder and they can certainly get the guy who offered 5k less, but in the meantime, you don't have a house and the way property prices are rising you'll end up paying more than 5k for a similar property (and no property tax).

c montgomery

exaisle wrote: »

Firstly, revenue don't make they rules or the laws, the Oireachtas does. Revenue interpret the laws and are subject to challenge through the courts, and this happens quite often...and they by no means win every case!

Secondly, you were the highest bidder and they can certainly get the guy who offered 5k less, but in the meantime, you don't have a house and the way property prices are rising you'll end up paying more than 5k for a similar property (and no property tax).

Property prices may be rising but the price range I was looking at and the area they are falling.
The house I'm sale agreed on had 3 price cuts before I bought it.

Revenue for the most part decide who is liable, in this case they have clearly said the seller is liable.

I'm happy to be a test case for this, I won't be paying it. I'll let you all know how it goes.

You are correct. Strictly speaking the deadline date is in November and the owner at that time is responsible for paying the tax for the whole year. I know of a case last year where the purchasers solicitor advised their client that it was their responsibility to pay the annual tax (sale closed in September).

Certainly the purchaser is entitled, through their solicitor, to ask that the vendor meet part of the cost pro-rata, but this is a matter of negotiation. I would be surprised for the vendors solicitor to unilaterally offer this, unless the purchaser has asked. Once requested, of course, it becomes a matter of negotiation, along with anything else the purchaser raises such as outcome of survey, closing dates etc etc...

If this is the only thing the purchaser asks for, I would be inclined to be flexible.... but if they are messing about with survey outcomes etc and other things, I would not concede it.

surrender monkey

There's several practice directions from the law society regarding property tax and practitioners follow them. You should check the contract for sale as the position re the tax is usually inserted as a special condition. Apportionment of the tax on closing is standard and is always done except where the purchaser was entitled to an exemption.

As regards the apportionment of management fees I can tell you that I have never seen an apartment sold where the management fees were not apportioned. What your saying happened with the management fees on your apartment was highly irregular . Even when you purchase a brand new apartment the fees are apportioned.

Good luck trying and I see your point but unless you get the seller to agree to take the hit and have a special condition inserted into the contract stating there is to be no apportionment both solicitors will follow the Law Societies practice direction i would guess !

Rew

c montgomery wrote: »

If I bought a second hand car I wouldn't pay any outstanding parking fines or pay back the portion of car tax that's still remaining.

Motor tax is included in car sales as part of the price, the owner could alternatively claim it back from revenue, instead its generally included as part of the deal as it has value. So you absolutely do pay the motor tax when your make an agreement on a 2nd hand car.

Liability is just revenue making sure they get paid, the negotiated contract for the sale is between you and the seller and can be anything. The standard practice is to apportion as it makes sense. If you don't want to then don't (assuming you haven't already signed the contract) and take your chances. Personally I hope the seller is as principled as you are

The_Conductor

c montgomery wrote: »

Not the way it works with management fees. When I bought it I benefited, when I sold out lost out.

It should be the same with property tax. In fact it is the same according to revenue and the law.

I bought an apartment in July 2014- and paid prorata management charges for the remainder of 2014 (6 months) and annually thereafter.
Its the norm, not an exception, to pay prorata charges when the charges in question cover a period other than the period in which you are the sole beneficiary of the dwelling.......

As for car tax- it was only recently that we changed the rules in Ireland- if you were selling a car- or indeed, scrapping it- any remaining cartax could up until a few years ago, be reclaimed (and if scrapping- the entirety of the remaining roadtax is reclaimable on production of the scrappage certificate).

DubCount

DubCount wrote: »

. Its worth a bit more than an identical car that doesnt have car tax already paid.

In reality its not. A car with a full years tax has no guarantee of selling for more than a similar car without its why I advise anyone not to waste their money taxing a car as a way to sell it quicker as they will more than likely not see the money back on the sale.

I actually agree with the op here and I would not be willing to pay the tax either. I am already paying a lot of money for the house and related costs I'd rather the few hundred in property tax in my back pocket for the Christmas than paying it back when I am under no obligation to do so. It would be a fairer system if the tax was based on how long you are in the house but its not and personally I'd be l;ooking to save the few hundred rather than volunteering the money to the seller.

Rew wrote: »

Motor tax is included in car sales as part of the price, the owner could alternatively claim it back from revenue, instead its generally included as part of the deal as it has value. So you absolutely do pay the motor tax when your make an agreement on a 2nd hand car.

See above tax makes no difference to the selling price of a car, the only exception maybe being a banger worth almost nothing which might be worth a bit more with a few months tax. Anything half decent wont increase in price because of tax.

Also you can only reclaim tax if you export the car or scrap it. You cannot reclaim tax on selling the car in Ireland.

bleary

I paid pro rata tax and service charge. Standard practice.
I saw a sale fall through over this when the tax first came into place. The practice wasn't established at the time.the vendor pulled the house and sold for 2 k under the highest offer because they were so pissed off with the buyer.

conf101

OP, you don't come across as if you're genuinely looking for opinions, just people to back up your own opinion that you shouldn't pay.

As you've said yourself, the liability for the tax is clearly with the seller, not you. That's not up for discussion.

You've already made up your mind that there's no need for you to pay a proportional share of it. Others disagree and say the fair thing to do is to pay a proportional share of it.

What's left to argue?