Implications for not paying NPPR?

cbruen1

Registered User
Messages
87
Hi, so there's this person - let's call them a friend - that has owned a 2nd property in Dublin since 2005. The plan on buying it was to have it as a pension as friend is self-employed and doesn't have a private pension.

My friend didn't realise or more correctly paid scant attention to the NPPR charge when it came in, as it was initially referred to as a holiday home tax and said friend didn't have a holiday home, only an apartment in Dublin that's rented out. So no NPPR has been paid on the apartment up until now.

So now my friend is starting to worry as there are fines building up and also it looks like there could be a charge against the property when the time comes to sell it (this could well be 25 years from now when the mortgage is paid off). So some questions:

- What will happen if my friend doesn't pay the NPPR?
- If my friend does pay before June 30th this year, can they claim that they only own the property for a year (i.e. tell porkies) or will they be liable for the previous years plus the fines also?
- When my friend goes to sell the property in 25 years and the NPPR has never been paid, what's likely to happen?

Any other info much appreciated.

Many thanks.
 
Currently, the late fee is 20 euros per month, on top of the actual NPPR charge itself of 200 euros per year. If you pay up a full year after its March 31 due date, that is a whopping 240 euros he has to pay in late fees, per year. So, do the sums.... 200 euros times 25 yrs is 5,000 euros. 240 euros times times 25 years is 6000. Your "friend" is looking at having to pay 11,000 before he can sell the property, and over half of that is late fees. That is a pretty stupid situation to get into imo. 200E is not a ton of money. Tell him to just get over it and pay it. There is no way around it.

If he owns a second home, he owes the tax. End of story. Whether or not he uses it as a holiday home, or an income generating rental property is irrelevant. There is another thread here about whether or not the NPPR tax is deductible as a legitimate business expense, so you may want to have him consult a tax attorney about that possibility.

When he goes to sell the property, his solicitor will need proof that all taxes and liabilities on it have been paid, including the NPPR tax. The property can not be sold if he can not do that, as the other sides solicitor will also want proof that all debts and liabilities owing on the property have been paid. Again, there is no way around that.

If your friend does not pay this tax for 25 years, there is no guarantee that all he will ever have to pay is the 200 euros yearly amount and late fees. As the years go by and he never ever pays the tax, the local authority (to whom the NPPR tax is paid) may very well instigate proceedings against him to get their money. That may well lead to additional fines, penalties etc etc.
 
Hi Beffers, you're right about being unable to sell the property without paying the charge, but way off the mark on how much would be owing.

If he sold the property in 25 years without ever paying the NPPR he would in fact owe closer to 90,000 euro (It's 240 per year on each outstanding charge).

Pay it, it's not worth the risk.

Sybil
 
Ok thanks for the updates. My friend has never received a demand for the tax - does this make a difference?
 
When your 'friend' goes to pay it online they will calculate the fees due as they ask the person the enter the years it is owed. BTW - Has your 'friend' made a tax return for all the years it has beem let out ? Revenue will not be so forgiving.
 
BTW - Has your 'friend' made a tax return for all the years it has beem let out ? Revenue will not be so forgiving.

Yes friend has made tax returns for each year it's been let out...does this make a difference?
 
Yes friend has made tax returns for each year it's been let out...does this make a difference?

Tax returns prove that he has been letting out this property, so he'd be very unwise to claim he has only owned the rental property for 1 year to dodge the fines.

Is he also registered with PRTB? If not, he should ASAP, otherwise the interest on his investment mortgage is not tax deductible.
 
Tax returns prove that he has been letting out this property, so he'd be very unwise to claim he has only owned the rental property for 1 year to dodge the fines.

Well it may be unwise but my friend physically doesn't have the money and he wanted to pay the current 200 and not let it roll over again, so he doesn't have a choice really. The mortgage repayment is now about 250 more than the rental income and management fees are 150 per month, so there's a shortfall of 400 euro per month. This coupled with the fact that the property is worth probably 70 to 80 k less than what he paid for it.

I know it's dodging the fines but he can't magic money out of nowhere. Is there any way he could talk to Dublin city council or come to some arrangement on the fine, maybe pay it off over time or something?
 
What is the position with an apartment willed to children which has to be sold & proceeds divvied up ? Does the executor have to pay the NPPR - and what if there isnt enough money in the kitty while waiting for apt to be sold ?
 
What is the position with an apartment willed to children which has to be sold & proceeds divvied up ? Does the executor have to pay the NPPR - and what if there isnt enough money in the kitty while waiting for apt to be sold ?

Yes Dave. When the sale is going through, the Solicitor for the purchaser requests proof that NPPR has been paid up to date. Have had personal experience of this, so it's better to pay up. Unfortunately, our sale fell through, so we (the beneficiaries) are paying the NPPR ourselves until a sale is reached.
 
There are a few exemptions as you will see from the FAQ on the website.It is due on ALL houses that are not your PPR...(you can only have ONE PPR at any given time...it doesn't matter if the house in question is rented/unoccupied/holiday home etc.Even if you only own one house...if you don't live in it...you must pay the fee.
 
What is the position with an apartment willed to children which has to be sold & proceeds divvied up ? Does the executor have to pay the NPPR - and what if there isnt enough money in the kitty while waiting for apt to be sold ?


Until probate is granted, there is no NPPR for the period since the owner died. From www.nppr.ie

Probate

Where there is a property whose owner is deceased, there is no person meeting the definition of owner in the Local Government (Charges) Act until letters of administration or probate have been granted. Where letters of administration are required, the person who is granted administration becomes the owner for the purposes of the Act. In a probate case, the executor becomes the owner on the issue of probate. Only at that point does liability kick in.
 
Well it may be unwise but my friend physically doesn't have the money and he wanted to pay the current 200 and not let it roll over again, so he doesn't have a choice really. The mortgage repayment is now about 250 more than the rental income and management fees are 150 per month, so there's a shortfall of 400 euro per month. This coupled with the fact that the property is worth probably 70 to 80 k less than what he paid for it.

I know it's dodging the fines but he can't magic money out of nowhere. Is there any way he could talk to Dublin city council or come to some arrangement on the fine, maybe pay it off over time or something?

It's better to pay at least the current 200, so fines of 20 per month won't be accruing on it. But 20 per month WILL be accruing on the previous year's charge, for EACH year, until it's paid.

He should register to pay NPPR charge, and pay as much as he can. The rest will be rolling over at 20 euro per month per year unpaid, until paid, so it's his choice really - to "borrow" the money from his Council at 10% interest PER MONTH (20 is 10% of 200, and that's the fine per month), or to find the money somewhere else.

It's better to get up to date on this now than in 25 years...

I suspect NPPR charge is a delayed time bomb, there are probably lots of people who don't pay, maybe don't even know that they should pay, and sometime down the line they are going to be in for a very nasty shock...
 
Well it may be unwise but my friend physically doesn't have the money and he wanted to pay the current 200 and not let it roll over again, so he doesn't have a choice really. The mortgage repayment is now about 250 more than the rental income and management fees are 150 per month, so there's a shortfall of 400 euro per month. This coupled with the fact that the property is worth probably 70 to 80 k less than what he paid for it.

How is the negative equity tied to the fact that he cannot pay the NPPR.

The NPPR works out at about 3.8 Euro's per week.

He should certainly start to pay the 200 and make a start on the backlog. This charge has a serious fine built into it and the co councils etc are only delighted with it. He should pay the NPPR for all years, that will stop the fine accruing,as far as I know there is no penalty interest if you haven't paid the fine, only if you haven't paid the NPPR itself. He can then take his time paying the fine.

Can he sell the property and pay back the negative equity if it doesn't make sense financially for him to be subsidising it.
 
How is the negative equity tied to the fact that he cannot pay the NPPR.
The point being made is that this is another cost added to the existing shorfall in mortgage vs rent, and the lower value of the property.

He should certainly start to pay the 200 and make a start on the backlog. This charge has a serious fine built into it and the co councils etc are only delighted with it.
This isn't a fine it's extortion. If any lending institution tried to charge interest rates anywhere near this they wouldn't be allowed.

He should pay the NPPR for all years, that will stop the fine accruing,as far as I know there is no penalty interest if you haven't paid the fine, only if you haven't paid the NPPR itself. He can then take his time paying the fine.
So is it possible to pay the 200 without paying the fine part, and stop the fine accruing?

Can he sell the property and pay back the negative equity if it doesn't make sense financially for him to be subsidising it.
If he sells the property he's looking at a loss of 70 - 80k, also properties just aren't selling. He is happy to subsidise it and is doing so like thousands of others in the same boat. What he's not happy about is the council bringing in extortion masquerading as a fine.
 
Well if he isn't happy with the "extortion" then he should have paid more attention when becoming a landlord. He was obviously smart enough to correctly know he had to submit a tax return on the rental income. And the NPPR was fairly widely publicised at the time.
 
Well if he isn't happy with the "extortion" then he should have paid more attention when becoming a landlord. He was obviously smart enough to correctly know he had to submit a tax return on the rental income. And the NPPR was fairly widely publicised at the time.

He became a "landlord" years before the nppr and its associated extortion was introduced.
 
Extortion or not, there was a large ad in todays Irish Independent advising people to pay the tax by July 1st or the late fees will start accruing for 2011. Perhaps your friend could get a grace period from the apts management company regarding their monthly fee & he could divert the funds towards the NPPR. Am sure that the mgt company will not be thrilled at the prospect, but at least they can not charge him a late fee each month. The Corpo can !

Perhaps you should suggest to your friend should pop into his local citizens information office every so often, and get himself up to speed on what the legal and financial obligations of being a landlord are, what may have changed since last year, or what new legislation/taxes/fees may have been recently introduced. If he made the assumption that the NPPR tax did not apply to him as the apt was not a holiday home, or that he shouldn't have to pay it if he wasn't sent a bill, he may be in need of guidance from a trained professional. He can get it there for free.
 
He became a "landlord" years before the nppr and its associated extortion was introduced.

So did I, but it didn't stop me noticing the introduction of NPPR charge and paying it, even though I don't even live in Ireland!

The charge itself - 200 euro per year - is NOT extortionate (yet), it's actually quite small. As to late payment fines - it's very easy to avoid them - just by paying the charge on time:)
 
Back
Top