If you sell your home for 15% above your LPT valuation...

Brendan Burgess

Brendan Burgess

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http://www.irishtimes.com/life-and-...-bill-for-shortfall-in-property-tax-1.1895097

Guidelines for sellers of residential property published by Revenue state if a home increases in value by greater than 15 per cent of the estimated value declared by the owner for property tax, they face a new valuation on the sale of the house.


Revenue will only provide clearance to sellers if they can show the valuation placed on their property on May 1st last year, when the tax was introduced, was made in good faith and is broadly accurate. Upward revisions can be backdated to that date.
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Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.
 
Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.
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The 200k extra could be due to factors outside the property such as wealthy buyer paying way over the odds (say 25-30%) to buy the house because of sentimental reasons (and I have witnessed such a purchase).

It does not make every house in estate/road more expensive because the next house went for the normal price in the neighbourhood.

So why should one house be an anomaly?

Is the purchase price = value of the property? (Generally yes but not always)

Also, I sell my house at a premium because a specific buyer needed it (for whatever reasons), has my property tax been undervalued for the last 12/24 months???
 
Brendan Burgess said:
Seems reasonable to me. If you value your house at €300k and sell it for €500k, you should have to revise it.
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Except it goes against their own guidelines: From page 4

PROPERTY SOLD WITHIN A VALUATION PERIOD
2.1 Continuation of valuation until following valuation date
The usual valuation rule is that the chargeable value that applies in relation to a valuation date continues to apply until the following valuation date. Thus, the chargeable value at 1 May 2013 covers the period up to 31 October 2016 and the chargeable value at 1 November 2016 covers the period up to 31 October 2019.
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file:///C:/Users/Steven/Downloads/guidelines-sale-transfer.pdf

These guidelines were only published last month. It looks as if the Revenue are looking to take advantage of rising house prices.

If you live in an estate and every house is valued in May 2013 at €300,000 but without an official valuation. You then sell for €400,000 today, you get hit with the higher tax? Doesn't sound fair.


Steven
www.bluewaterfp.ie
 
There was an official from the Revenue's LPT division on Morning Ireland, and the message I heard was that as long as the original valuation was sound and reasonable, it wouldn't generate an increased liability on the vendor if the new valuation (sale price) brought it into another band.

Also, that any change of up to 15% wouldn't attract their attention.
 
T McGibney said:
That wouldn't be a first. Time they were brought to heel.
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And what on earth does revenue mean by this:

Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same.

Does that mean nobody was allowed to keep their original valuation, even though it genuinely might have been correct. This of course would apply in particularly in the rapidly rising Dublin market.
 
I recently sold a house for 30% over the valuation. I was able show that I based the original valuation on a similar house sale in 2013 and Revenue accepted it without looking for the increased amount.
 
Sunny did you get a certificate from revenue to satisfy the purchasers solicitor?
 
Bronte said:
And what on earth does revenue mean by this:

Revenue could not give figures for scenarios where the charge was corrected downwards or allowed to remain the same.

Does that mean nobody was allowed to keep their original valuation, even though it genuinely might have been correct. This of course would apply in particularly in the rapidly rising Dublin market.
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I would have thought its meaning clear - they couldn't give a figure. Ie they don't have it recorded in a way that easily allows that total to be garnered.
 
mandelbrot said:
I would have thought its meaning clear - they couldn't give a figure. Ie they don't have it recorded in a way that easily allows that total to be garnered.
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But they are able to give figures for those who had changed their valuation.
 
mandelbrot said:
Which is the opposite of "allowed to stay the same"...!
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I don't know. (Bit slow on the uptake sometimes)

But Sunny applied for and was allowed stay the same. So I guess they know how many Sunnies have applied for the stay the same certificates needed for closing sales.
 
Bronte said:
I don't know. (Bit slow on the uptake sometimes)

But Sunny applied for and was allowed stay the same. So I guess they know how many Sunnies have applied for the stay the same certificates needed for closing sales.
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Not necessarily, we'll have to wait and see what Sunny got in his case.

You're talking about a call centre type environment, where work items go through the system, and are only identified as a certain category. If the category is too broad, ie it includes other types of query or issue, then it may not be straightforward to identify what you want.

Edit:
I suppose my point is, barring a conspiracy theory, if Revenue had the figure they'd give it. If they don't have it, it's because their system doesn't separately identify it.
 
Bronte said:
And what did you have to provide them with to get this certificate? Is it a standard certificate, any chance if it is that you could scan it.
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I didn't see it. My solicitor requested clearance from Revenue and then forwarded it on to the buyers solictor. I have no idea of what form it takes. Maybe a solicitor here will be able to answer.

By the way, we are not talking about a big house here. It was valued in the 100k to 150k bracket but was sold for 198k. I was able to show houses on sale in the area for with an asking price of €140k-€150k in 2013 and also used the price register to give an idea of the local property market. I never heard anything back after providing an explanation for the valuation.
 
I didn't see it. My solicitor requested clearance from Revenue and then forwarded it on to the buyers solictor. I have no idea of what form it takes. Maybe a solicitor here will be able to answer.
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Can you remember roughly how long it took to get the clearance. Was it days or weeks?

The process has to start after sale agreed so sellers are under pressure which allows the possibility that Revenue could tune the delay to be long enough to dissuade people from bothering even if it's a clear cut case.

They can take as a compliment or insult but Revenue are the Ryanair of government departments. (Except Ryanair are getting bit softer of late.)
 
Revenue on Pat Kenny Newstalk today

Everybody with a property selling for 15% over the original valuation to revenue need to get written clearance.

There is a procedure.

The solicitors and owners are under an obligation to ensure there is a property history (I think she mentioned prices and payment history to be kept)

If under 15% difference, you can go online/ or the solicitor can.

Form is called LTP5 (not sure if I got that right)

You will have to clarify that the original value is true.

Pat asked her why the threashold was so low, as all properties in the Dublin area have gone up way more than this 15%. She said this is under review.

He asked her wasn't this a waste of taxpayers money, paying revenue to do work that is not needed. She confirmed that most cases are correct, and that a small amount are incorrect. He then asked her again wasn't the cost of this a waste in comparision to the couple of hundered Euro they might get.

The process is quick she said. Except for the small number of cases under review.

All you have to do to keep your original valuation, is prove you kept to the revenue guidelines of the time.

Tthey are only concentrating on cases where they have a suspicion.

Proofs mentioned were a) property price register b) properties within the area c) comparing like with like. This is what revenue will look at basically.

The clearance process has existed from day one of this tax.

A solicitor has rung in and claimed that revenue are making solicitors responsible for yet another thing, they it is they who will get into trouble and Ireland is clogged with taxes and bureocracy. No comment from Revenue on that.

Advice to revenue

Can you forthwith increase your 15% threashold to the current increase in Dublin, for properties in the Dublin area. And stop with nonsense reviews about the 15%. Read the papers or send one of your experts to look at the property price register or the stamp duty records that you hold.

I would love to know as a percentage how many of those over the 15% were incorrect, and how much revenue got back in LPT for those.
 
The 15% is a bit low, but the principle is correct.

Maybe issue a monthly index to reflect the movement in house prices? Adjust this for the different counties?

Maybe add an extra 5% for unique factors.

But if someone sells their property in rural Ireland for 40% more than they valued it 15 months ago, then they undervalued the property and need to pay more LPT.
 
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