Deferring payment of the Local Property Tax

Introduction

You may opt to defer, or partially defer payment of your Local Property Tax (LPT) if you meet the conditions.

You may qualify for a deferral under one of 4 separate categories:

  • Income threshold
  • Personal representatives of a deceased liable person
  • Personal insolvency
  • Hardship grounds

If you meet the deferral criteria you can opt to defer the full LPT until your financial circumstances improve or the property is sold. However this does not mean that you are exempt from the LPT. Interest is charged on the deferred amount and the deferred amount remains a charge on the property.

There are partial deferral arrangements. If you meet the partial deferral criteria you can opt to defer 50% of your LPT liability and pay the balance. Interest of 4% per annum is charged on the deferred amount and it remains a charge on the property. If you qualify for a partial deferral of LPT you must contact Revenue and select a payment method for the remaining 50% of your LPT liability.

You can get further information on Revenue's website on deferring payment of LPT.

Rules

Deferral of LPT based on income threshold

To qualify for full or partial deferral for LPT based on the income threshold criteria you must be an owner occupier and your gross annual income from all sources must not exceed certain amounts (see table below). You qualify for deferral each year based on your estimated gross income for the previous year. So, for example, if you are liable for LPT on 1 November 2016 (the liability date) you should assess your estimated gross income for 2016 to see whether you qualify for deferral or partial deferral in 2017. If your gross income for 2016 is below the threshold you will qualify for deferral of the tax in 2017.

To qualify for full or partial deferral your gross annual income from all sources must not exceed certain amounts (see table below). If you have an outstanding mortgage the income threshold is increased by 80% of your gross mortgage interest payments. You must be paying the mortgage to qualify.

Income thresholds for full and partial (50%) deferral of LPT liability
Liable person (owner-occupiers only) To qualify for a full deferral your gross income must not exceed To qualify for a partial (50%) deferral your gross income must not exceed
Single, no mortgage €15,000 €25,000
Couple, no mortgage €25,000 €35,000
Single, with mortgage €15,000 + 80% of gross mortgage interest €25,000 + 80% of gross mortgage interest
Couple, with mortgage €25,000 + 80% of gross mortgage interest €35,000 + 80% of gross mortgage interest

Gross income is your income before any deductions, allowances or reliefs. It includes income that is exempt from income tax and income from Department of Social Protection payments but does not include Child Benefit.

Couples include married people, people in a civil partnership and certain cohabitants. For LPT deferral purposes cohabitants must have lived together for at least 2 years if you have children and 5 years if you do not have children.

A single person or a couple whose only income is a payment from the Department of Social Protection (DSP) will qualify for a full deferral because DSP payment rates are below the thresholds.

Deferrals based on income thresholds are granted on a self-assessment basis and there is no approval process. Revenue takes your word that your gross income is likely to be below the relevant threshold and the deferral is granted automatically when Revenue gets your LPT1 form.

If you claimed a deferral for a year and your circumstances change you must inform Revenue.

What happens if the liable person dies?

If one member of a couple who qualified for a deferral dies the deferral will remain in place until the next valuation date (currently 1 November 2019) and the income of the surviving person is not taken into account until then.

On 1 November 2019, the surviving person may make a claim for deferral of the tax. If you satisfy the conditions, you will qualify for deferral. If you do not qualify for deferral the amount that was deferred up to the end of 2019 may continue to be deferred. Interest at 4% per annum will be continue to be charged on the deferred amount in the usual way.

If you inherit a property from another person (for example, a parent) the deferral will remain in place until the next liability date (1 November each year). After that date, Revenue may allow the deferral to continue if you apply for a deferral and satisfy the conditions for deferral in your own right. The transfer of the property to you means that the tax deferred to that point plus interest becomes payable at the date of transfer unless you satisfy the conditions for a deferral in your own right.

Deferral for personal representatives of a deceased liable person

When a person dies, his/her property passes to his/her personal representative. The personal representative then has the duty to distribute the deceased person's money and property in accordance with the law, the will - if there is one - or the laws of intestacy if there is no will. The personal representatives of a deceased liable person may apply for a deferral until (a) the property is transferred or sold or (b) 3 years after the date of death (whichever is earlier). To qualify for deferral the deceased person must have been the sole owner of the property.

You can claim a deferral for any LPT outstanding at the date of death, any LPT already deferred by the deceased person and LPT that became payable following the death.

Deferral based on personal insolvency

If you have entered into a Debt Settlement Arrangement or a Personal Insolvency Arrangement you can apply for a deferral of LPT while the insolvency arrangement is in place. You must have formally agreed your insolvency arrangement with the Insolvency Service of Ireland and your Insolvency Case Number must be included with your application.

Deferral based on hardship

If you do not qualify for a deferral under the other categories and you have had both an unexpected and unavoidable significant financial loss or expense, as a result of which you cannot pay the LPT without causing excessive financial hardship, you can apply for full or partial deferral.

You must disclose your financial circumstances and any other information required by Revenue.

Examples of the type of losses or expenses that may be considered when granting a deferral on these grounds include:

  • Emergency medical expenses
  • Major repairs to a house that are needed to keep the house habitable and that arise unexpectedly
  • Expenses connected with a serious accident or death of a family member
  • Losing your job
  • A bad debt incurred by a self-employed person

Rates

Any deferred amounts have interest charged on them at a rate of 0.011% per day (4% a year).

Example of interest calculation: Jack sells his home 3.5 years after he first deferred his LPT payment in July 2013. He deferred €100 of LPT in 2013 and €200 for each of the years 2014, 2015 and 2016. On the day Jack sells his house he is liable for 3.5 years of LPT. He therefore owes €700 of tax in total. However he owes varying amounts of interest on that tax since the first year’s deferral will have incurred 3.5 years’ interest – but the next year’s tax will have incurred 3 years’ interest and so on. So the interest would be calculated like this (note that this figures are just for demonstration purposes and do not represent an actual LPT charge):

Year 1- Year 4: 2013 - 2016 €100 x 3.5 years (1,276 days) at 0.011% interest per day = €14.04 interest
Year 2– Year 4: 2014 - 2016 €200 x 3 years (1,095 days) at 0.011% interest each day = €24.09 interest
Year 3 – Year 4: 2015 - 2016 €200 x 2 years (730 days) at 0.011% interest each day = €16.06 interest
Year 4: 2016 €200 x 1 year (365 days) = €8.03 interest
The total amount of interest Jack has to pay on €700 of deferred LPT is €62.22. So Jack will pay €762.22 in total.

How to apply

To apply for a deferral or partial deferral on the basis of the income threshold criteria you use the LPT1 form only. This is available when you access your LPT record on-line. If you don't file on-line, an LPT1 form will issue to you automatically by Revenue. If you are applying for a deferral under any of the other 3 categories you must fill in the LPT1 form and an LPT2 form (pdf).

You can access your LPT record on-line using your Property ID, Property PIN and PPSN or tax reference number to claim a deferral for 2017. You must apply by 11 January 2017. Alternatively, if you received a letter and an LPT1form from Revenue, you may complete the LPT1 form and submit this to the Revenue Commissioners by 11 January 2017.

If you have been allowed a deferral you can make a payment at any time of all or some of the deferred amount. Revenue will credit a partial payment to the oldest period of deferred LPT first.

Where to apply

The Revenue Commissioners

Local Property Tax (LPT) Branch
P.O. Box 1
Limerick
Ireland

Tel:+353 (0) 1 702 3049
Locall:1890 200 255
Homepage: http://www.revenue.ie/en/tax/lpt/index.html

Page edited: 15 December 2016