Sale price exceeds LPT valuation

Discussion in 'The Local Property Tax' started by Blackrock1, Jan 12, 2017.

  1. Blackrock1

    Blackrock1 Frequent Poster

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    We are sale agreed on an apartment in SCD. at the time of LPT self assessment there were a few apartments in the same development (but not the same block or size im sure) that sold for under 250k, therefore i put the property in the 250-300k bracket and we have paid LPT on this basis.

    The sale price that will be achieved when we close is over 500k.

    Looking at the rules it appears that if the final price is > the top end of the declated LPT valuation +50% (in Dublin) so 450k in my case, then you have to pay the excess LPT.

    My question is do i do this now in advance of my solicitor bringing it up and perhaps delaying the close, or can he arrange as part of the close. Also what do i need to do to repair the situation, pay LPT as if i was in the 350-400k bracket (which at the x1.5 times rule makes me compliant) or do i have to pay the LPT as if the property was always worth the achieved selling price?

    thanks in advance
     
  2. Gordon Gekko

    Gordon Gekko Frequent Poster

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    I don't think that's the case. Revenue's website states that you should consider whether the vendor's valuation was reasonable and honest. There does not appear to be a 50% threshold. As it happens, prices are up around 50% on average, but my sense is that each case must be judged on its merits.
     
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  3. Blackrock1

    Blackrock1 Frequent Poster

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    115
    From here:

    http://www.revenue.ie/en/tax/lpt/sale-transfer-property.html#section1

    and this link

    http://www.revenue.ie/en/tax/lpt/guidelines-sale-transfer.pdf


    4.2.2 General clearance condition 2 – allowable valuation margin
    The condition in this section relates to the allowable margin by which the sales price of a
    property exceed the valuation band/chargeable value that was declared for the property in
    relation to the 1 May 2013 valuation date. Different allowable margins apply in relation to
    properties situated in Dublin city and county and those in the rest of the country.
    Condition 2: The sales price must not exceed the upper limit of the valuation
    band/chargeable value or that, when it does, that any such excess must be within the
    allowable margin.
    The allowable margins are:
     Where the sales price is not more than 25% higher than the upper limit of the
    band declared, and
     In the case of properties whose declared chargeable value exceed €1,000,000,
    where the sales price is not more than 25% higher than the chargeable value.
    In the case of properties situated in Dublin city and county, the 25% allowable margin is
    increased to a 50%6 allowable margin.
     
  4. elcato

    elcato Moderator

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    2,523
    You need to get on the LPT now and ask for a clearance cert. Your solicitor should probably advise you already about this. If they say they are not happy then pay the shortfall and appeal after the sale if you want it to go smoothly.
     
  5. Blackrock1

    Blackrock1 Frequent Poster

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    115
    have already paid arrears as if the property should have been classed two levels higher so that should see me right!
     
  6. Bronte

    Bronte Frequent Poster

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    11,804
    I agree with Elcato's advice. And I don't care what revenue guidence says. If you correctly valued your property at the time I can't see the issue. Look up the property registar to see what apartments sold for in the year before and during which you valued it. That's pretty accurate as a priceline.
     
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  7. HouseHunter2016

    HouseHunter2016 Registered User

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    11
    Blackrock1,

    Have a look at the document you linked to above "guidelines-sale-transfer.pdf"

    You are quoting from part 4.2.2 which relates to a request for General Clearance. The scenario you describe doesn't appear to fit in with General Clearance.

    However, if you read on further in that document to part 4.3 this relates to Specific Clearance (page 16):

    "4.3 Provision of specific Revenue clearance Revenue will consider specific written clearance on request from a vendor where the conditions in sections 4.2.1 to 4.2.4 above are not met but the vendor, nevertheless, claims that the valuation at the 1 May 2013 valuation date was made in good faith. This clearance will be separate to the standard online clearance described in section 3.2 above in relation to crystallised LPT liabilities at the date of sale. It will relate solely to potential ‘uncrystallised’ liabilities arising after a property is sold. Revenue will examine the valuation band/chargeable value that was declared in relation to the 1 May 2013 valuation date. Where it is satisfied that this was reasonable, it will confirm that there will not be a charge on the property following its sale. Alternatively, where it is not satisfied that the valuation band/chargeable value that was declared was reasonable, it will not provide clearance but will, instead, make a Revenue assessment on the vendor".

    If "Specific Clearance" is granted to you by the LPT office, there is no need to pay a higher level of LPT.
    Check part 4.3 for the supporting documents you need to make an application for Specific Clearance.
     
  8. Blackrock1

    Blackrock1 Frequent Poster

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    115
    thanks for the that

    for the sake of the 500 or so its going to cost me id rather pay than have the sale held up i think
     
  9. facetious

    facetious Frequent Poster

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    501
    I would assume that the €500k was not the value of the apartment 2 years ago and even less 3 years ago so,unless you have taken this into account you should be due a refund.
     
  10. priscilla

    priscilla Frequent Poster

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    241
    I bought a property in 2014. I paid 2 bands higher than what it had been initially valued at.
    I contacted the LPT to enquire would I need to increase the band to what I had just paid.
    They told me not to worry about it, the band stays the same from what it was first valued at until 2017.
     
  11. Bronte

    Bronte Frequent Poster

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    11,804
    Priscilla why did you value it two bands higher?
     
  12. priscilla

    priscilla Frequent Poster

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    Priscilla why did you value it two bands higher?

    Sorry Bronte, I wasn't clear in my reply.
    The price I paid for the house was more than had been valued for property tax.
    I contacted the property tax people in case I needed to pay for the difference but they said the valuation remains the same until 2017 I think.
    I suppose I should this year now revalue it to the proper band level.