Taxing Times for Property Investors


Owners of residential rental properties, holiday homes and vacant residential properties should beware, as they are now liable to pay a new property tax. Under the Local Government (Charges) Act 2009, the Minister for the Environment, John Gormley has introduced a tax of €200 on all non-principal private residences. Revenue collected from this new tax will be paid to the local authority in whose area the property is situated.

Liability:
Under the Act, liability will arise for the property owners at a point in time, known as the “liability date”. This date was 31 July for 2009 but in the following years the liability date will be the 31 March. Failure to pay the charge within the relevant period will mean that property owners will incur a late payment fee calculated at a rate of €20 per month, or part of a month that the charge remains unpaid. A grace period of one month applies after the charge falls due. Taxes and fines left unpaid will accumulate annually. Failure to pay the charge is an offence and if convicted offenders risk a fine of up to €2000.

Payment of the Charge:
Payment of the charge is due on 30 September this year, and any payments received after 31 October 2009 will be subject to a €20.00 late fine per month. The charge is collected on a self-assessment basis and property owners who are liable can register on www.nppr.ie and pay the charge online. There will be no reminders sent to property owners so the onus is on those liable to register and pay before the due date.

Excluded Properties:
Home owners will be glad to know that the charge is not applicable to principal private residences, or principal private residences where the owner lives in the property but also lets out rooms within it. Certain other buildings are excluded from the scope of the Act, these include buildings used as dwellings which are:

• Of particular heritage value
• Occupied as a dwelling by a parent or both parents of the owner
• Newly constructed but unsold and not used as dwellings
• Let by certain public authorities
• The subject of a shared ownership arrangement with a housing authority
• Owned by voluntary housing bodies
• Liable for commercial rates
• The subject of a contractual arrangement with a housing authority or the HSE, or leased to a housing authority.

A further exception is property that has been the principal residence of a person in residential nursing home care prior to their admission. However if the property has been rented to a third party they may be liable for the charge.

Section 1 of the Act expressly excludes mobile homes from the definition of a building and so mobile home owners are not liable.

Who is liable to pay the charge:
The Act defines owner of a property as the person to whom rent on the building concerned is payable, or would be payable if it were to be rented out. This is the person who is liable to pay the charge on the liability date. Therefore the responsibility to pay the charge lies with the landlord, and not the tenant. Co-owners will note that they are jointly and severally liable for the charge.

Moving House?
The Act makes provision for someone who is moving house and owns two residential properties for a limited period of time. In such cases, the charge is refundable where a person acquired a second property in the year previous to the relevant liability date, for the purpose of it becoming his principal private residence, and then disposes of the original property within 6 months of the liability date.

What is important for home owners to note is that unpaid property charges and late payment fees will be a charge against the property for a period of 12 years after the charge falls due. This may cause a problem in the event of the sale of the property.

Under section 11 of the Act, local authorities may request information from the PRTB (Private Residential Tenancies Board), the ESB and the Revenue Commissioners to assist them in carrying out their functions. For example, they will be able to check whether the power has been turned off during the winter months, which would suggest that the property is used solely as a summer residence.

For further information, please contact Grainne Macdougald, Solicitor