Who pays the Local Property Tax when buying or selling a property?
There are a number of provisions of the Finance (Local Property Tax) Act 2012 which apply to who is liable for the Local Property Tax (LPT).
They are as follows:
Section 123 of the Finance (Local Property Tax) Act 2012 (the 2012 Act) provides that any local property tax (LPT), interest or other monetary penalty amount which is due and unpaid by a liable person shall be and remain a charge on the relevant residential property to which it relates. Section 124 of the 2012 Act provides that the charge referred to in Section 123 shall continue to apply without a time limit until such time as it is paid in full.
Section 126 (1) of the 2012 Act (as amended by Section 12 (e) of the Finance (Local Property Tax) (Amendment) Act 2013 (the 2013 Act)) provides that a vendor of residential property shall before completion of the sale of the property pay any local property tax (LPT), penalties and accrued interest due and payable in respect of that property. Section 126 (2) of the 2012 Act (as amended by Section 12 (f) of the 2013 Act) provides that LPT shall be paid notwithstanding that a sale of a property is completed before that tax is payable in accordance with Section 119 (1A) (inserted by the 2013 Act).
Section 127 of the 2012 Act provides that any unpaid LPT and any penalties and accrued interest shall remain a charge on the property to which it relates. This statutory obligation on the vendor does not mean that the amount of the LPT already paid by the vendor cannot be apportioned between the vendor and the purchaser at closing. It is the view of the committee that this should be done except where an exemption from LPT applies.
As a result of the above provisions of the 2012 Act, the Law Society of Ireland has advised all solicitors acting on behalf of individuals both selling and buying properties to include a provision in the Contracts for Sale that sets out that the vendor shall discharge the LPT up to the 31/12 of the year of the sale and that the purchaser will pay to the vendor on closing an apportioned amount of the LPT from the date of closing up to the 31/12 of that year.
If there is an exemption applying to the LPT for the vendor they must furnish evidence of that exemption in advance of exchange of contracts. It will be a matter for the purchasers after the closing of their sale to ensure that they register for payment of the LPT for their new property.
If you have any queries in relation to the operation of the Local Property Tax or any other issue in relation to a Property Purchase or Sale or if you are looking for a low cost conveyancing quotation please do not hesitate in contacting us directly in our offices at (01) 2300022.