Buying a property- property tax

th283

Hi all, just wondering if anyone has any idea how long a local property tax clearance cert takes to get sorted? I went sale agreed on a house 14 weeks ago ea said all paperwork would be with my solicitor within a week but still haven’t received anything as the seller is waiting on a lpt cert and their solicitor refuses to release any paperwork without it

JennyLuck

Yep, in the same boat, unfortunately... Been sale agreed for over six months now and everything is moving at a snail's pace. Don't suppose you've had any movement on this? Cheers!

th283

JennyLuck wrote: »

Yep, in the same boat, unfortunately... Been sale agreed for over six months now and everything is moving at a snail's pace. Don't suppose you've had any movement on this? Cheers!

No movement yet- well nothing good! The bank contacted me to say the loan offer expires in 6 weeks and the life insurance company has said I’ll have to reapply for cover. Also the price is rising in the area- a house in the same estate went up this week with an asking price 50k above my sale agreed price.

sophfudge

Cant you just get the LPT online through myaccount?

Thoie

I sold my place last year, and I was able to give them an initial printout from the property tax website (showing I was up to date), then it was about 3 weeks iirc for the council to send the solicitor the official letter.

stargazer 68

Shouldn't take that long unless there is another issue. We went sale agreed before Christmas and closed on 15th Feb.

JennyLuck

th283 wrote: »

No movement yet- well nothing good! The bank contacted me to say the loan offer expires in 6 weeks and the life insurance company has said I’ll have to reapply for cover. Also the price is rising in the area- a house in the same estate went up this week with an asking price 50k above my sale agreed price.

It's a total nightmare. We were all ready to close, date set, and then this came up with property tax. Very little to protect anyone buying or renting in this country. All the regulations seem to side with vendors and landlords.

sophfudge

apparently you only need a cert if the property sells for over 350k

katie275

We're in a similar situation, sale agreed at 400k and the vendors haven't produced a tax clearance certificate certificate yet. They bought for 375k in 2016 (checked property price register).
Our solicitor told me to read up on the September 2017 LPT guidelines. Apparently they could have possibly registered in the wrong bracket which would mean we end up with a big tax bill if we go ahead with the purchase without this being resolved, obviously we don't want this! Can't get much clarity from the revenue guidance.
Hope it doesn't prove to be an issue, we're just dying to move in, contract stage seems to be going on forever and our loan approval expires end of this month!
Anyone been through similar?

mp3guy

katie275 wrote: »

We're in a similar situation, sale agreed at 400k and the vendors haven't produced a tax clearance certificate certificate yet. They bought for 375k in 2016 (checked property price register).
Our solicitor told me to read up on the September 2017 LPT guidelines. Apparently they could have possibly registered in the wrong bracket which would mean we end up with a big tax bill if we go ahead with the purchase without this being resolved, obviously we don't want this! Can't get much clarity from the revenue guidance.
Hope it doesn't prove to be an issue, we're just dying to move in, contract stage seems to be going on forever and our loan approval expires end of this month!
Anyone been through similar?

It's right here on Page 17, Section 5.

A €500 fixed penalty may be imposed on a vendor who does not provide information to a
purchaser about the chargeable value that he or she has declared to Revenue.

A vendor could also be liable to a separate penalty of the amount of the additional LPT
that is payable for making a false statement to obtain a reduction in the LPT payable.

A purchaser could be liable to a penalty for failure to submit a revised chargeable value
where it appears to him or her that the value that was declared to Revenue by the vendor
could not reasonably have been arrived at. This penalty would be the amount of the
additional tax payable as a result of the correct value being declared, subject to a
maximum penalty of €3,000.

So basically, if you buy the house and then don't correct the tax bracket for LPT after closing you could be liable. But why wouldn't you do that?

You will not end up with a big tax bill if you go ahead. If your solicitor told you that you might consider a second opinion. Source: Same situation, my solicitor told me all I know.

The vendors can apply for General Clearance if it applies, or Specific Clearance if needed. Alternatively, they can just correct the bracket before selling and settle any arrears for this year. In that case, you have to pay the prorated LPT for the year at the new (presumably higher) rate.

katie275

Thanks for that! Apparently my solicitors understanding is incorrect so!

mp3guy

katie275 wrote: »

Thanks for that! Apparently my solicitors understanding is incorrect so!

But don't trust random person on the internet either (me). Get a second professional opinion.

GGTrek

The rules are complex and changed several times since 1st May 2013. The only way to sort it out is to call Revenue LPT helpdesk and ask them to forward the call to LPT Branch head office that is located in Ennis, Co. Clare. It really depends on when the property was last sold and which guidelines where used (the original ones of 2013, the revised ones in 2014 or the ones of 2017). You should expect a minimum of 4 weeks to get the clearance sorted if there are no additional requests for documentation. So yes it will cause a big delay in a sale.

There is no certificate for general clearance, the solicitor should apply the right guidelines and verify if general clearance applies. To the best of my understanding there are four conditions for general clearance, if any one of the four can be applied there is no need to ask for special clearance:
1) sale price does NOT exceed € 350,000
2) sale price does not exceed upper limit of LPT valuation band + 80% (for a Dublin property or 50% for a property outside Dublin)
3) total value calculated for condition 2 + value of invoiced improvements to the property is greater or equal to the sale value
4) This is the most difficult due to documentation: provide examples and marketing material of similar properties (in size and amenities) in the same electoral district (Revenue provides a map of these districts) in the 9 months before 1st of May 2013 or before the last date of sale if later.

If none of the conditions above apply then a mix of special clearance with band revaluation (and payment of LPT arrears) has to be requested and this takes time.

Hope this contribution is helpful, please feel free to correct or add on anything that I might have incorrectly interpreted.

stickman1019

Does every household in Ireland have property tax?? Are one off builds exempt for some reason

mp3guy

stickman1019 wrote: »

Does every household in Ireland have property tax?? Are one off builds exempt for some reason

One off builds are not exempt.

katie275

GGTrek wrote: »

You should expect a minimum of 4 weeks to get the clearance sorted if there are no additional requests for documentation. So yes it will cause a big delay in a sale.

To the best of my understanding there are four conditions for general clearance, if any one of the four can be applied there is no need to ask for special clearance:
1) sale price does NOT exceed € 350,000
2) sale price does not exceed upper limit of LPT valuation band + 80% (for a Dublin property or 50% for a property outside Dublin)
3) total value calculated for condition 2 + value of invoiced improvements to the property is greater or equal to the sale value
4) This is the most difficult due to documentation: provide examples and marketing material of similar properties (in size and amenities) in the same electoral district (Revenue provides a map of these districts) in the 9 months before 1st of May 2013 or before the last date of sale if later.

Am I correct in saying that even in the property was entered into the 200-250k bracket, general clearance would apply under condition 2 (sale price 400k in Dublin)?
My solicitor said revenue usually are pretty quick, are you saying 4 weeks from personal experience?
Cheers!

GGTrek

katie275 wrote: »

Am I correct in saying that even in the property was entered into the 200-250k bracket, general clearance would apply under condition 2 (sale price 400k in Dublin)?
My solicitor said revenue usually are pretty quick, are you saying 4 weeks from personal experience?
Cheers!

If there were no sales between 1st of May 2013 and today, to the best of my understanding yes condition 2 of general clearance would apply to the case you presented and your solicitor should not be requesting anything except a full up to date proof that LPT, NPPR and Household charge have been paid.

I speak from experience and noticed that some solicitors cannot properly apply general clearance rules. The delays happen only when vendor has to apply to Revenue with LPT5 form special clearance or when either the buyer or the seller solicitor do not understand correctly general clearance rules.

If I were you I would question in a very detailed manner your solicitor on the conditions of general clearance applied.

I just noticed that there was a sale in 2016 of 375k for the house you are buying. 2016 clearance rules were different, so maybe the seller should have sought special clearance at the time.

Sarah 1111

Hope its ok to jump in here - we are having the same problem. We have signed the contract and paid deposit but the vendor needs to register and pay back property taxes before we settle. They have mentioned four weeks but we don't have a definite date yet.

The property value is under the threshold of 350,000 so only needs general clearance - not specific clearance.

Does general clearance just mean proof of payment, I got the impression from the Revenue website they only need to give us a screenshot of the Revenue page showing the payment.

But also looks as though they need to apply for a property ID number and pin in order to pay. Does anyone know how long this might take? Does four weeks seem right or could it be quicker?

Spanish Eyes

LPT evidence of payment is instantly available online with Revenue.ie

Don't know what the issue is for vendors. Surely they have this information.

Anyway, the bigger issue might be the Household Charge. Take note.

Dolbhad

Sarah 1111 wrote: »

Hope its ok to jump in here - we are having the same problem. We have signed the contract and paid deposit but the vendor needs to register and pay back property taxes before we settle. They have mentioned four weeks but we don't have a definite date yet.

The property value is under the threshold of 350,000 so only needs general clearance - not specific clearance.

Does general clearance just mean proof of payment, I got the impression from the Revenue website they only need to give us a screenshot of the Revenue page showing the payment.

But also looks as though they need to apply for a property ID number and pin in order to pay. Does anyone know how long this might take? Does four weeks seem right or could it be quicker?

To close your solicitor needs to see lpt 2013 - 2019 is paid in full - usually transaction history can be printed of. People can forget pins but if there isn’t a property ID number that would indicate it’s never been registered. That will takes weeks to be set up and issue a number. If it’s just a pin that can take a week or two to issues. Has your solicitor received any lpt transaction history. Lpt attaches to the property so if you buy and lpt is outstanding, you for the bill. Since last year interest now accuses when lpt is not paid so it could get hefty. You don’t won’t to be caught with that.

If specific clearance is needed than that can take weeks to issue unless sellers want to increase band and pay difference which they won’t want to do.

th283

Sarah 1111 wrote: »

Hope its ok to jump in here - we are having the same problem. We have signed the contract and paid deposit but the vendor needs to register and pay back property taxes before we settle. They have mentioned four weeks but we don't have a definite date yet.

The property value is under the threshold of 350,000 so only needs general clearance - not specific clearance.

Does general clearance just mean proof of payment, I got the impression from the Revenue website they only need to give us a screenshot of the Revenue page showing the payment.

But also looks as though they need to apply for a property ID number and pin in order to pay. Does anyone know how long this might take? Does four weeks seem right or could it be quicker?

I can only go on my own experience- I went sale agreed in December 17 and didn’t get the keys until the end of June 18. According to the estate agent there was a backlog of paper work and property taxes

4ensic15

There can be NPPR issues, which are getting more difficult every year.

Sarah 1111

Dolbhad wrote: »

To close your solicitor needs to see lpt 2013 - 2019 is paid in full - usually transaction history can be printed of. People can forget pins but if there isn’t a property ID number that would indicate it’s never been registered. That will takes weeks to be set up and issue a number. If it’s just a pin that can take a week or two to issues. Has your solicitor received any lpt transaction history. Lpt attaches to the property so if you buy and lpt is outstanding, you for the bill. Since last year interest now accuses when lpt is not paid so it could get hefty. You don’t won’t to be caught with that.

If specific clearance is needed than that can take weeks to issue unless sellers want to increase band and pay difference which they won’t want to do.

Ok, yes, it appears it was never registered - the vendor is going to register and pay the back tax (so that we, as buyers, pay the one percent stamp duty, otherwise it would be six percent). We only need general clearance not specific clearance as the property is under the threshold price. So we continue to wait.... you would think Revenue or whoever does it would get a move on so that they can get their money... thanks for your answer.

Sarah 1111

th283 wrote: »

I can only go on my own experience- I went sale agreed in December 17 and didn’t get the keys until the end of June 18. According to the estate agent there was a backlog of paper work and property taxes

oh.. we went sale agreed in April. They said settlement would be four weeks from signing the contract - we signed last week but not sure if the vendor has yet - our solicitor thought the four weeks was to allow for the property tax and registration to be sorted out. So fingers crossed I suppose.

Dolbhad

Sarah 1111 wrote: »

Ok, yes, it appears it was never registered - the vendor is going to register and pay the back tax (so that we, as buyers, pay the one percent stamp duty, otherwise it would be six percent). We only need general clearance not specific clearance as the property is under the threshold price. So we continue to wait.... you would think Revenue or whoever does it would get a move on so that they can get their money... thanks for your answer.

Do you mind me asking - why would you be paying 6% stamp duty otherwise? I though It’s only 6% for non residential property or land/sites. It’s 1% for a house up to one acre and up to €1 millions.

Sunrise_Sunset

On the Revenue website it says that "You must determine the market value of each property as at the valuation date of 1 May 2013." and "This valuation applies to your property for a seven year period up to and including 2019."
We valued our apartment then and have stuck with that valuation each year since then for paying the LPT. We are now selling the apartment. Is this all in order?

https://www.revenue.ie/en/property/local-property-tax/valuing-your-property/index.aspx

Dolbhad

Sunrise_Sunset wrote: »

On the Revenue website it says that "You must determine the market value of each property as at the valuation date of 1 May 2013." and "This valuation applies to your property for a seven year period up to and including 2019."
We valued our apartment then and have stuck with that valuation each year since then for paying the LPT. We are now selling the apartment. Is this all in order?

https://www.revenue.ie/en/property/local-property-tax/valuing-your-property/index.aspx

You will have to look at what you are selling it at now. It’s understood value of house was at its lowest in 2013 so that’s why they have general clearance for sale under €350k outside Dublin and €500k for Dublin. If your selling above that and the band doesn’t match, you may have to change it.

It’s more an issue if you purposely valued a property at low amount to just pay the cheapest amount. Otherwise if you near enough the actual value at the time, general clearance will kick in.

Sunrise_Sunset

Dolbhad wrote: »

You will have to look at what you are selling it at now. It’s understood value of house was at its lowest in 2013 so that’s why they have general clearance for sale under €350k outside Dublin and €500k for Dublin. If your selling above that and the band doesn’t match, you may have to change it.

It’s more an issue if you purposely valued a property at low amount to just pay the cheapest amount. Otherwise if you near enough the actual value at the time, general clearance will kick in.

As at the valuation date in 2013 it was valued at less than 150,000. It has now been valued at 220,000. Do I need to update this? Are am I ok because as per the revenue website it's up til the end of 2019.

Dolbhad

Sunrise_Sunset wrote: »

As at the valuation date in 2013 it was valued at less than 150,000. It has now been valued at 220,000. Do I need to update this? Are am I ok because as per the revenue website it's up til the end of 2019.

Yep to you are okay as your under the threshold so general clearance applies.

Sarah 1111

Dolbhad wrote: »

Do you mind me asking - why would you be paying 6% stamp duty otherwise? I though It’s only 6% for non residential property or land/sites. It’s 1% for a house up to one acre and up to €1 millions.

It is one per cent for residential up to one acre and up to one million as you say, but the vendor must produce proof they have paid property tax up to date in order for the buyer to pay the one per cent.
In our case, and many others according to our solicitor, the house is an old farmhouse which has been empty for several years so they never registered it. As just farmland (with a wreck) it would be six percent.

Sunrise_Sunset

Dolbhad wrote: »

Yep to you are okay as your under the threshold so general clearance applies.

Jaypers, phew. Thanks for that. Really don't need a possible delay like that getting in the way.