LPT clawback on sale of property

[Homer]

I have friends who are in the process of selling their house. The sale price is around 80% higher than the price at which the property was valued for LPT purposes. They have been advised that they may be subject to an additional LPT charge because of the discrepancy.

I know that our own house has increased in value by a similar percentage, but we are in a suburban estate where there are houses constantly changing hands and the price we submitted for LPT purposes can be readily validated by reference to other property sales in the area.

Not so with our friends, whose house is in the countryside with nothing directly comparable that they can use as proof that the valuation they gave for LPT purposes was reasonable. Should they be worried?

 

[mf1]

They should talk to their solicitor- s/he'll advise on the Revenue Guidelines on the general "uplift" in value allowed by Revenue.

See this link:

https://www.revenue.ie/en/property/documents/lpt/guidelines-sale-or-transfer-sept-2017.pdf

Revenue/ a purchaser won't query if the sale price is less than €350K and Revenue allow an uplift of 50% - from value used to sale price.

mf

 

[_OkGo_]

I don't think they should be particularly worried if it is the 2013 LPT valuation that you are referring to but yes they should talk to their solicitor. Broadly speaking, the CSO data suggests that an 80% increase in value since May 2013 is about right.

Recovery
Property prices nationally have increased by 83.7% from their trough in early 2013. Dublin residential property prices have risen 91.5% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 83.9% higher than at the trough, which was in May 2013. See Figure 1.3.

Residential Property Price Index September 2020 - Central Statistics Office

www.cso.ie

 

[Homer]

Thanks folks.

I read through the documents and it does seem as if there may be some liability. The property is not located in Dublin and I note that there is a "general" limit of 80% applying to Dublin properties and 50% elsewhere. I guess their solicitor should be able to advise them on what they need to do and how much they might need to pay.

 

[NoRegretsCoyote]

Broadly speaking, the CSO data suggests that an 80% increase in value since May 2013 is about right.

Yes but the allowable margin outside Dublin is only 50% more than the upper bound of the 2013 valuation band.

Them's the Revenue rules.

I had to back pay a band or two on the sale of my late father-in-law's house. In general it's not a huge amount in the scheme of any sale.