FAQ Landlords, tenants, the Local Property Tax LPT and income tax

Brendan Burgess

Brendan Burgess

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There have been a few debates about this issue, but the purpose of this thread is to clarify the facts. Posts containing comments about fairness or non-factual issues will be deleted.

I am not a landlord or a tenant, so this is a skeleton article. I expect others to provide links and corrections.

Who is liable for the Local Property Tax?

The owner of the property i.e. the landlord is liable for the property tax

The tenant has no direct liability for the tax

Can the landlord pass on the charge to the tenant?
The landlord cannot pass on the charge to the tenant if it is not provided for in the lease

When the rent is reviewed, the landlord can charge only the market value - he cannot charge market value + Local Property Tax The rules for rent reviews are summarised here

Is it legal for the lease agreement to say that the tenant will pay all taxes and charges?
I don't know.

It is probably best practice not to mention the LPT in the lease agreement
If you specify that the tenant must pay €500 a month in rent and the LPT of €120 , the tenant could dispute it.

It would be a lot simpler to specify that the tenant should pay €510 in rent. The tenant may appeal the rent because it's not the market value, but they won't have the basis for claiming the landlord is passing on the LPT illegally.

The Local Property Tax and income tax
I have started a separate thread to try to clarify this for once and for all: Can a Landlord deduct the LPT for tax purposes?
 
Brendan Burgess said:
Can the landlord pass on the charge to the tenant?

When the rent is reviewed, the landlord can charge only the market value - he cannot charge market value + Local Property Tax
Click to expand...

Broadly agree mostly with what you've posted.

One would assume that the LPT willl result in rents increasing. Local market value is very hard to exactly pin down. Not all flats in one building would command the same price even. So there is room for argument on this. Location, size, facilities all come into play.

I think it would be dodgy to deduct the 'charge' from your other income to calculate tax. Taking my own situation, I have some tenants who pay me rent but also pay me say 10 Euro's each for the shared electricity/bins/water whatever. I put both the rent and the electricity on my tax return as income. Then I just put down the ESB bills as a cost. My accountant seems happy with that.
 
Hi Tommy

No offence, but it's strange to describe it as bizarre.

If you specify that the tenant must pay the LPT, then there is a risk that this is illegal and you won't get it.

It would be a lot simpler to specify that the tenant should pay €510 in rent. The tenant may appeal the rent because it's not the market value, but they won't have the basis for claiming the landlord is passing on the LPT illegally.

There is nothing "bizarre" about this.
 
I don't follow how you can put it in the lease agreement? To get around this. Where does that idea come from?
 
Hi Brendan

I think we're at cross purposes here.

Of course the landlord, as assessable person for the LPT, must pay the LPT. Its not possible to delegate or assign this responsibility to a tenant.

But if the landlord is minded to recoup the cost of the LPT from the tenant, the tenancy contract must stipulate this. Otherwise the landlord is powerless to do so.

And a properly-worded tenancy contract should also cover the possibility that the LPT may increase in future years, allowing provision for any such increases to be passed on to the tenant.

If the landlord alternatively seeks to impose successive rent rises to recover the LPT costs, they will be unable to do so without the tenant's agreement.

This is why tenancy contracts MUST include mention of the LPT if the landlord wants to protect their interests.
 
T McGibney said:
..Its not possible to delegate or assign this responsibility to a tenant.

But if the landlord is minded to recoup the cost of the LPT from the tenant...
Click to expand...

The act of defining a cost as LPT, means you can't recoup it in addition to to the rent. That approach makes no sense to me.

By not defining it, you can recoup it by increasing the rent, within the vagueness of the market rate.
 
The simplest solution to the recovery of LPT for landlords is to increase the rent at the next renewal date if the Market can take it without mentioning LPT. You need to take account of the fact that as of now the LPT is not allowed as a deduction for tax purposes which is discriminatory against landlords.
There will be posters telling people to get on to PRTB and Threshold about market value for rents and while they can do this there is very little either organisation can do for them. It would be a foolish landlord who would be trying to go over the market rate.
I give a very good service and have very good tenants who are getting a very good deal and everyone is happy
 
If I did leases there is no way I'd put in a clause about the LPT having to be paid for by the tenant. It's the landlords legal obligation and not the tenant's. The way around this is just to have a rent review.

Putting in such clause is possible illegal and you are only looking for trouble. The same does not apply in relation to for example the new water charges.

I live in a country that has a very high property tax, but it can not be passed on to the tenant's. It's one of the few obligations a landlord has. In reality of course the tax along with some other costs such as mortgage repayments are really already calculated into the rent.
 
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