Can a Landlord deduct the LPT as an expense for tax purposes?

six weeks later - can any of the wise and knowledgeable tax accountants on AAM tell us what are they advising landlord clients as regards claiming LPT as an expense?

Separate from opinions that it "should" be allowable I can't find a definitive ruling on this.

What are your contacts in Revenue saying ?
 
oldnick said:
six weeks later - can any of the wise and knowledgeable tax accountants on AAM tell us what are they advising landlord clients as regards claiming LPT as an expense?

Separate from opinions that it "should" be allowable I can't find a definitive ruling on this.

What are your contacts in Revenue saying ?
Click to expand...

Dunno about others but my position is as set out above. That said, the final decision is always up to the client.

I see no reason to refer to "contacts in Revenue" on issues such as this, in fact the entire concept seems rather creepy to me. My role is to represent and serve my client, Revenue's role is to serve the State. If I uncritically substitute my own opinions for theirs I am neither serving nor representing my client.
 
Thanks Tommy. Pretty well as I expected .
I just thought/hoped that by now there would be no need for opinions and that one could point to a rule that is in no way ambivalent.
 
Has there been any clarification on the issue of deducting the LPT as a cost against gross rents since the last post on here? I need to file return soon for student grant purposes and I'm unsure what to do.
 
I'll ask the question again. Is there any clarification on this..? it is not mentioned on the Revenue website. Is this a local rate or a government tax..? Can this be included as an expense when submitting yearly returns on a rented property. Please help..
 
I'm claiming it, as I did the NPPR. I've discussed with my accountant, debated with accountants on here, have also been in contact with an accountant in Dublin. But it's on your own head, I'm prepared for that.

It is no different to rates and it's as simple as that.
 
Here's Revenue's guidance on the point:

"The Government has accepted in principle the recommendation in the Thornhill Report that LPT be a deductible expense in calculating a landlord’s taxable rental income and that the deduction be phased in over a number of years with the start date being determined by the economic and budgetary situation. However, the Government has not yet decided to bring the deduction into effect. Until the necessary amendment is made to section 97 of the Taxes Consolidation Act 1997, LPT is not a deductible expense and therefore should not be claimed as a deduction when submitting your Income Tax/Corporation Tax Return for 2013."

http://www.revenue.ie/en/tax/lpt/faqs/general.html#section9

And here's what the Minister for Finance had to say last October in response to a PQ:

"I am advised by the Revenue Commissioners that section 97(2) of the Taxes Consolidation Act 1997 specifies the expenses that a landlord is entitled to deduct from gross rent in computing rental profits for tax purposes. Paragraph (c) of subsection (2), which refers to services rendered, reads as follows:

"(c) the cost to the person chargeable of any services rendered or goods provided by such person, otherwise than as maintenance or repairs, being services or goods which -

  1. in the case of a rent under a lease, such person is legally bound under the lease to render or provide but in respect of which such person receives no separate consideration, and
  2. in any other case, relate to and constitute an expense of the transaction or transactions under which the rents or receipts were received, not being an expense of a capital nature;".
As the payment of Local Property Tax (LPT) under the Finance (Local Property Tax) Act 2012 (as amended) by the "person chargeable", i.e. the landlord, is not a service rendered by that person, a deduction for LPT is not allowable under section 97(2)(c). In the context of property rental, examples of such services would include garden maintenance, laundry or house cleaning. While it is not possible to be definitive as regards local charges which might apply in the future, it is difficult to envisage that their treatment under section 97(2)(c) would be any different to the treatment which applies to LPT under that provision.

I am also advised that LPT is an annual self-assessed tax on residential properties in the State and is administered by the Revenue Commissioners in accordance with the Finance (Local Property Tax) Act 2012 (as amended) and that the reference to local authority rates in section 97(2) is, following the removal of rates on domestic property in the late 1970's, a reference only to rates on commercial property payable to local authorities in accordance with the relevant local government legislation. Notwithstanding that local authorities can, with effect from 2015, vary the rate of LPT in accordance with section 20 of the LPT legislation, LPT is not a rate levied by a local authority and is, therefore, not deductible from gross rents under section 97(2).

As regards the recommendation of the Thornhill Report that the local property tax should be a deductible expense in calculating a landlord's taxable rental income, the Government has agreed in principle to accept this recommendation. The Thornhill group recognised the considerable pressures on the public finances and the need to bridge the gap between expenditure and revenue, and, for this reason, suggested that consideration be given to phasing in deductibility over a period of years. The Thornhill group also considered that it was for Government, having regard to the prevailing budgetary situation, to decide on the time span for phasing-in deductibility and on what percentage of LPT to allow as a deduction from gross rents for tax purposes."

To date, the Government has not introduced any legislation to change this position.

Obviously taxpayers are free to disagree with Revenue's guidance and the interpretation of the Minister for Finance.
 
Sarenco:

What is LPT used for?

Why was it brought in?

Can the amounts charged be changed?

By whom?

Is revenue guidance law?

Is the minister an expert on whether it is deductable?
 
@Bronte:

What is LPT used for? - Irrelevant.

Why was it brought in? - Irrelevant.

Can the amounts charged be changed? - Irrelevant, but yes.

By whom? By legislation, or by the local authority.

Is revenue guidance law? - No, but it sets out Revenue's interpretation of the law. This is their position on the issue, so if you disagree with it, it's not Revrnue you need to convince (since they've already got their interpretation), but an appeal commissioner and/or a judge.

Is the minister an expert on whether it is deductable? - The Minister isn't the expert, what minister ever is, but the response to that PQ will have passed through several layers of subject matter experts to ensure the position set out is believed to be correct.
 
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To be fair Bronte, Fredmck didn't ask whether others are planning to deduct LPT as an allowable expense - he asked whether there was any clarification on the point.

I simply posted, without comment, whatever guidance is available and specifically stated that others are free to disagree with Revenue's guidance and/or the Minister's remarks.

I really don't see that there is much point is re-hashing old arguments but, as you know, I think it's perfectly clear that LPT does not constitute "rates" within the meaning of Section 97(2) TCA. Again, you are free to argue otherwise.
 
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