LPT: Elderly person state OAP: to defer or not? or expected beneficiaries to pay now?

M

mendacity

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My mother is 84 and living alone in her own home. Her only income is the state old age pension so she qualifies for a deferral.

Suppose she chooses this option each year and ultimately when she passes away her home will be willed to the family and will most likely be sold.

Will the state come after the estate for payment of the LPT arrears accrued?
 
Yes. Well less a case of the State coming after the estate, than the LPTbeing a charge against the property which needs to be discharged when title passes.
 
http://www.revenue.ie/en/tax/lpt/lpt-faqs.pdf
8.1 Full or Partial Deferral
A system of deferral arrangements for owner-occupiers will be implemented to address cases where there is an inability to pay the LPT under specified conditions. The deferred tax remains a charge on the property until the property is sold or transferred to another person.
Interest will be charged on deferred amounts at a rate of 4% per annum. The deferred amount, including interest, will be a charge on the property and will have to be paid to Revenue on the sale/transfer of the property.
 
She should definitely defer, unless you, or other possible beneficiaries (sorry) want to pay now. I know quite a few people paying on behalf of elderly parents.
 
theresa1 said:
If at all possible your Mother should pay each year - don't defer.
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Why not defer? If the house owner is on a low income, is it not better to have the money as income now, rather than ploughed into an asset which is not going to be much use to you when you're dead?
 
Also those going to lose their homes through repossession would be better off deferring as it will then be the banks problem.
 
im trying to get my parents to defer both in mid seventies and only on state pension.. they are so upset about trying to pay this i said to them to defer but they are terrified that revenue can come into their home and take tv's etc!! .. im trying to explain to my mam why shouldnt she defer and enjoy life and let us worry about it afterwards.. but she feels she is doing us out of inheritance then if she does.. im sorry but I think its disgraceful that older people that having nothing to do with the crash have to pay this bond tax!
 
dub_nerd said:
Why not defer? If the house owner is on a low income, is it not better to have the money as income now, rather than ploughed into an asset which is not going to be much use to you when you're dead?
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Totally agree. The "don't defer" sentiment is likely to come from folks who stand to inherit the property! If they feel so strongly, let them pay for their parents' LPT I say, otherwise if I was 84 and had only the state pension (which is pretty generous to be honest, given the medical card and other assorted benefits of old age) then I'd defer and let them take it out of my property when I'm dead.

My mother is 70. She's paying herself (but she's not a typical 70 year old, still in normal 9-5 PAYE employment and no sign of retiring!) but if she ever wants to stop, myself and my brother will probably start paying it if she's agreeable.
 
suemoo1 said:
im trying to get my parents to defer both in mid seventies and only on state pension.. they are so upset about trying to pay this i said to them to defer but they are terrified that revenue can come into their home and take tv's etc!! .. im trying to explain to my mam why shouldnt she defer and enjoy life and let us worry about it afterwards.. but she feels she is doing us out of inheritance then if she does.. im sorry but I think its disgraceful that older people that having nothing to do with the crash have to pay this bond tax!
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They don't have to pay. They can defer and let it be taken out of the proceeds of their legacy. Then it will be their heirs that "pay".

Property tax is long over due. Rates should NEVER have been abolished on dwellings by a populist FF move designed to buy an election (do we never learn?). If we'd retained rates and not relied on transaction taxes to fill the exchequer coffers, we may not have had such a devastating crash in the first place!
 
suemoo1 said:
im trying to get my parents to defer both in mid seventies and only on state pension.. they are so upset about trying to pay this i said to them to defer but they are terrified that revenue can come into their home and take tv's etc!! .. im trying to explain to my mam why shouldnt she defer and enjoy life and let us worry about it afterwards.. but she feels she is doing us out of inheritance then if she does.. im sorry but I think its disgraceful that older people that having nothing to do with the crash have to pay this bond tax!
Click to expand...

I understand the feeling. I have a relative who is terrified to defer in case the law changes in future and Revenue pursues them. They have no intention of ever selling and no dependants who will inherit the house, so I am trying to convince them that deferral is by far the best policy. I think they have finally agreed.
 
Although it would be a longwinded title, should it not say "those who expect to be beneficiaries". A will can be changed. One can imagine ugly scenes if an expectant beneficiary incurred expenses in anticipation of inheriting an asset, only to find themselves cut out of the will.

Another interesting question is how the deferred LPT charge is treated in the calculation of CAT. Is it deducted from the value of the estate before CAT is calculated? If that is the case then it would be mad for the beneficiary to pay the LPT on a property that was valued above the CAT threshold. You would save the 4% interest charge on the LPT, only to increase the value of the estate by the amount of the LPT which would then be taxed at 33%. By deferring the LPT you incur a 4% hit, but avoid a 33% hit (assuming, as I said, that the CAT is calculated on the value of the estate net of the accrued LPT charges).
 
My understanding is that CAT is always calculated on the net value of an estate (I don't see how it could be otherwise) so your point would be valid, and could be very significant amounts in the case of a high-value property.
 
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