Discussion: Why is it called "Local" Property Tax?

[Sumatra]

Housing irregularities, illegal dumping, Ballybeg files, council corruption where scandals and decet is the norm. There is already cross subsidation in my local area because as tax payers we all pick up the bill for shambolic handling of funds.


A LPT Parlimentary question by Deputy Robert Downs to the minister of Finance w/e 25 Jan 2013 (2888/13) regarding accountability could have been phrased better or replied to more honestly.


Looks like it isn't going to change and it looks like we won't be in a position to ask.

 

[Bronte]

But Michael Noonan and the Revenue have told us its not going to be tax deductible as its "not levied by a local authority".

I'm totally confused. The NPPR is not tax deductable (and I disagree on revenue's reasonings on this) but the new Property tax is tax deductable?

It's part of the reason as a landlord I was delighted they did away with NPPR (along with the fact that this is a tax per property and not per unit) and replaced it with the local property tax.

 

[T McGibney]

I'm totally confused. The NPPR is not tax deductable (and I disagree on revenue's reasonings on this) but the new Property tax is tax deductable?

It's part of the reason as a landlord I was delighted they did away with NPPR (along with the fact that this is a tax per property and not per unit) and replaced it with the local property tax.

Revenue have stated in writing that the Property Tax is not deductible but that it may become deductible in the future. Noonan has said likewise.

Frankly I think they're both talking nonsense, but the Revenue tried a similar strategy with the NPPR, creating misleading impression that it wasn't a valid expense in the context of owning and managing a rental property when both common sense and tax laws in other jurisdictions indicated the direct opposite.

And they got away with it, to the point that tax advisors like myself dare not claim the NPPR deduction in our clients' tax returns.

 

[Bronte]

And they got away with it, to the point that tax advisors like myself dare not claim the NPPR deduction in our clients' tax returns.

Yes my own accountant will not let me claim it. We discussed it but it's a no no. And I understand that it's not in my best interest to rock the boat, though I'd dearly love to, and try and claim it, but with the resulting risk of them turning their audit eyes on me I probably haven't got the nerve, even though I'm all up to date and everything (fingers crossed as I'm always at the end of the day in awe of the powers of revenue).

Why Tommy are the accountants as a body not able to take a case on this? What is holding them back? They sent off one letter and got one reply but how about testing it all the way? Would it cost too much?

Anyway you've now upset my whole weekend as I am most disappointed after my last budget elation on the new property tax.

 

[T McGibney]

I think nobody has the stomach to spend tens of thousands on legal proceedings to secure a €200 per property tax deduction.

Please don't let it ruin your weekend. I feel guilty now.

 

[Bronte]

I think nobody has the stomach to spend tens of thousands on legal proceedings to secure a €200 per property tax deduction.

There is something wrong with the system when we ordinary tax payers cannot challenge what is clearly an injustice due to monetary constraints. That's more sad then me being unhappy about the tax deductabilty of the new propety tax.

(I'll get over my upset - honestly I cannot complain when I see the carnage all around)

 

[mandelbrot]

There is something wrong with the system when we ordinary tax payers cannot challenge what is clearly an injustice due to monetary constraints. That's more sad then me being unhappy about the tax deductabilty of the new propety tax.

(I'll get over my upset - honestly I cannot complain when I see the carnage all around)

It costs nothing to take an appeal to the appeal commissioners.

It only starts to get expensive if/when you lose at appeal and go to court.

 

[Bronte]

Then Mandlebrot how come no accountant with their client has taken a case to the appeal commissioners (mental note to self - this year I must again ask my accountant about say just going to the appeal commissioners step, as the 4 years since introduction are up this year, it's a sizeable sum at this stage too).

 

[T McGibney]

If you take a case to the Appeal Commissioners, Revenue will send in a barrister to fight their corner. If you're serious about winning a case there, you'd be well advised to do likewise, as a barrister will normally be able to tie a lay person's arguments in knots.

It is true that no fee is charged to a taxpayer to take a case to Appeal, but its very misleading to suggest that it costs nothing.

 

[mandelbrot]

If you take a case to the Appeal Commissioners, Revenue will send in a barrister to fight their corner. If you're serious about winning a case there, you'd be well advised to do likewise, as a barrister will normally be able to tie a lay person's arguments in knots.

It is true that no fee is charged to a taxpayer to take a case to Appeal, but its very misleading to suggest that it costs nothing.

Revenue only appoint counsel in a fraction of appeal cases. Although given the nature of the issue (one with a broad application/impact, and a fair bit of tax at stake in the aggregate) it would probably be a likely candidate for counsel.

The argument is quite a simple one anyway - does the NPPR fall within any of a limited number of classes of deductions set out in the Act. Fancy argument doesn't really come into it.

I'm surprised though, that no accountant or tax advisor with their own property interests hasn't been irked enough by the issue to do an expression of doubt on their own return, force a decision and go to appeal. Although it's possible that it may be in train somewhere in the country and not widely known about at this point.

 

[Bronte]

So how often does just a low time taxpayer go into the Appeal Commissioners and revenue bring out barristers? Is that the way the Appeal commissioners is supposed to work? Seems an amazingly offputting system for mere ordinary taxpayers such as myself (small time landlord).

 

[seantheman]

Why Tommy are the accountants as a body not able to take a case on this? What is holding them back? They sent off one letter and got one reply but how about testing it all the way? Would it cost too much?

What's in it for the accountants to take a case? You're gonna pay their fee irrespective. Shouldn't it be a grouping of landlords that take a test case as it's in their intrests?

 

[smeharg]

Nobody has taken a case as it's unlikely to succeed.

The legislation is quite clear in what is allowed as a deduction for calculating rental profits:

S.97(2)(b) Any sums born...in respect of any rate levied by a local authority.

Is NPPR or LPT a rate? "Rate" isn't defined in the tax acts. You'd probably need to go back to Valuation (Ireland) Act 1852 to find a statutory definition (and good luck trying to find that!). But the generally accepted definition would be a charge levied by a local authority based on the value of a building.

So there's 2 things to satisfy:

1. Levied by a local authority
2. The charge is by reference to the value of the building.

NPPR satisfies neither. While it may be payable to a local authority it is not set by the local authority. It's also a flat charge without reference to the value of the building.

LPT clearly satisfies the second requirement. But (at present) it is not levied by the local authority.

The second relevant provision in the tax acts is S. 97(2)(c)

the cost of ... management of the premises...relating to and constituting an expense of the transaction...under which the rents...were received.

You could argue for a year and a day whether or not it is an expense of management of the premises. However, I think the important part of that section is the "relating to and constituting an expense of the transaction...under which rents were received". This implies a connection between the expense and the rental transactions. As NPPR and LPT are levied irrespective of whether the property is let or it would be difficult to argue such a connection. In addition Revenue could also argue that it's a tax and not an expense.

Minister Noonan has stated that it is planned to allow LPT as deduction in the future and will be done on a phased basis. Perhaps this will be done in parallel with the setting and collection of LPT by the local authorities.

 

[Chancer]

This thread's about why it's called "Local". I saw someone complaining about the notion of ONLY 80% being retained locally. Well now we've heard Fingal will have to GIVE AWAY well over 80% of the LPT we paid.
Redistribution is all very well but this level of redistrib kills this charge as any means of restoring local democracy.
Co Cos can only reduce the LPT so long as they can find the shortfall from some other means. If Fingal reduced its LPT by 15% it would I bet effectively have NEGATIVE LPT receipts because DOE would hardly let Leitrim suffer because Fingal reduced its LPT.
With the disparity in LPT receipts per voter between Fingal and Leitrim (getting on for 20-fold!), we see the farce of this charge; the principle apparently is, as a joe-soap dubliner you have to pay a lot for your house because you have to go where the jobs are and you haven't an option to build on daddy's farm and work where you were born; then, just because you've had the "privilege" of paying more for your house, you must pay more LPT. If, by contrast, you were born up the end of a boreen, you pay less for your house, less LPT, and your struggling urban fellow citizens shell out extra LPT to maintain your mile-long "public-property" boreen, which is really a huge garden path. Very socially just I'm sure.
I can't understand why this scandalous robbery of LPT isn't a local election issue.

 

[Drakon]

All successful economies have a property tax. In fact, Ireland's current woes would be less if we had a property tax over the last 20 years. Better late than never.
You'll find, generally speaking, that in the western world, taxes have a "Robin Hood dimension", i.e. redistribution of wealth 'from the haves to the have nots'. Hence, the wealth of localities are distributed to poorer areas.
We live in a democracy, and you can express your opinion on 23rd May. Or move to North Korea. It's not perfect. You may not like your choices, but at least you have choices.

 

[dub_nerd]

If, by contrast, you were born up the end of a boreen, you pay less for your house, less LPT, and your struggling urban fellow citizens shell out extra LPT to maintain your mile-long "public-property" boreen, which is really a huge garden path. Very socially just I'm sure.

I've a house up one of those boreens. When the road gets washed away in the winter, a local with a bucket of gravel fills the potholes. There's no gritting when it snows or freezes over, so the locals that are able to get out of their houses run errands for each other. There's a community water scheme. The locals club together to hire someone to cut back the hedgerows each year. The local exchange got wired for broadband but no provider will replace the 40 year old single telephone wire that runs up the boreen, so the locals can't get it. So remind me again what "maintenance" is being paid for?