Your guide to the local property tax
Since its introduction the local property tax has almost been as unpopular as water charges. However it looks set to stay and important changes have recently been announced by the Government.
Background to the local property tax
The local property tax (LPT) was first introduced back in 2013 to help broaden the tax base and leave the Government less dependent on income tax in particular.
Property tax is paid by homeowners in the vast majority of other European countries and it was hoped the tax could be used to fund local services better.
Property tax is often considered a form of wealth tax and many economists think it is better and fairer to raise this tax as opposed to income tax as by doing the latter you can create a disincentive to work.
However some political parties in Ireland such as Sinn Féin currently want to abolish it.
There used to be a few opt outs from the tax, such as anyone who had bought a new build home since 2013 and those who bought in 'ghost' or unfinished housing estates.
However these no longer apply and from 2022 pretty much everyone who owns a home will have to pay the tax.
The more your home is worth, the more you’ll pay.
How much is the local property tax?
The amount you pay is based on the value of your home (within a band) as of 1 November 2021. It is not based on the amount you originally paid for your home.
The tax was previously based on the value of your home as of 1st May 2013.
However the rate bands have been widened and the charge reduced from 0.18% to (a rather specific!) 0.1029% on homes up to €1.05 million* so that people's bills don't skyrocket. This is because property prices are now about 80% to 90% higher than May 2013.
According to an analysis by the Department of Finance, around 53% of homeowners should not end up paying any more than they currently do, while 11% will see a decrease. However, in addition to the homes built after 2013 being brought into the net, an estimated 36% of homeowners will see an increase in their charge.
The tax is self-assessed, meaning you tell Revenue how much you think your home is worth.
If you have invested significantly in your property and extended it, this should be reflected in the valuation you provide.
|Valuation band number||Valuation band||Tax|
|1||€0 - €200,000||€90|
|2||€200,001 - €262,500||€225|
|3||€262,501 - €350,000||€315|
|4||€350,001 - €437,500||€405|
|5||€437,501 - €525,000||€495|
|6||€525,001 - €612,500||€585|
|7||€612,501 - €700,000||€675|
|8||€700,001 - €787,500||€765|
|9||€787,501 - €875,000||€855|
|10||€875,001 - €962,500||€945|
|11||€962,501 - €1,050,000||€1,035|
|12||€1,050,001 - €1,137,500||€1,190|
|13||€1,137,501 - €1,225,000||€1,409|
|14||€1,225,001 - €1,312,000||€1,627|
|15||€1,312,001 - €1,400,000||€1,846|
|16||€1,400,001 - €1,487,500||€2,065|
|17||€1,487,501 - €1,575,000||€2,284|
|18||€1,575,001 - €1,662,500||€2,502|
|19||€1,662,501 - €1,750,000||€2,721|
So let's say your house is valued at €300,000 in November 2021, you're in band 3 and will pay €315 a year.
If you're lucky enough to live in a home worth €1.2mn for example, you're in band 13 and will pay €1,409 a year.
*Properties above this will be charged 0.1029% on the first €1.05m, 0.25% on any balance up to €1.75m, and 0.3% on any balance above this amount.
Local authority rate discounts
Your local authority can vote to increase or decrease the LPT rate by up to 15% from the base rate. This is referred to as the Local Adjustment Factor (LAF). So the rate you pay could be up to 15% more or less than the amount shown above.
When the LPT was first introduced, many councils voted to reduce the tax by the maximum 15% allowed given how unpopular it was. However this has begun to change in recent years as hard-pressed local councils seek more funding.
However Dublin City Council recently voted against making any changes and it still applies the maximum 15% discount.
Here's a look at how some of the main councils nationwide have chosen to apply a LAF.
Local authority area
Dublin City Council
Fingal County Council
Dun Laoghaire Rathdown County Council
South Dublin County Council
Cork City Council
Galway City Council
Sligo County Council
Limerick City & County Council
Waterford City & County Council
What's happening now?
Revenue is currently writing out to all homeowners seeking updated property valuations. Homeowners must let Revenue know the value of their home at 1 November 2021 by filing a local property tax return before 7th November.
These valuations will last until 2025 - at which time the bands and charges will probably be reviewed again.
How do I file a Local Property Tax return?
The easiest way to do this is online.
People can access the LPT portal directly on Revenue.ie, or through MyAccount or the Revenue Online Service, which are both also available on Revenue's website.
How much does the property tax raise?
The tax currently raises around €480 million a year.
It’s estimated the new changes will raise around another €80 million or so a year.
Dublin City Council is where the most local property tax is collected at around €70 million a year.
It is followed by Dun Laoghaire-Rathdown on €44 million and Cork County Council on €39 million.
However, not all this money may actually be given to these councils as some can be redistributed elsewhere - as has happened with the money raised by Dublin City Council.
However the Government has said that from 2022 onwards, all money raised by local councils can be kept by them.
Where does the money go?
Well, that's a good question.
The tax was supposed to fund local services better. Think more bins, public toilets, more frequent street cleaning, nicer lighting, more public seating, better maintenance of roads and pavements and investment in things like local libraries and swimming pools.
Before the tax, central government gave local authorities a subvention each year, which along with business rates and car parking charges largely funded local councils.
However funding from central government was hugely reduced once the property tax was introduced so councils were in many cases no better off.
And as mentioned above, some councils like Dublin City Council even had some of its LPT revenues given to other local authority areas.
So the result has been homeowners paying more but often seeing far less in the way of local services.
What if I pay management charges?
Management charges are used to pay for the upkeep of your apartment complex so have nothing to do with the property tax.
However in recent years some new build housing estates have been subject to them too in order to pay for services which in the past would have been done by local councils.
It's been argued therefore that those who pay management charges should receive some type of discount on their property tax but for now nothing has been agreed by the Government.
What if I can't pay?
If you're single and earn less than €18,000 a year or a couple who earn less than €30,000 you can fully defer paying your property tax. These limits were previously €15,000 and €25,000 respectively.
These limits are for people who have fully repaid their mortgage and are now mortgage free. A slightly higher income threshold is allowed for deferral if you're still paying a mortgage.
However in all cases you will be charged interest on the amount owed and must pay it eventually.
If you die before you've repaid any tax due, it will be taken from your estate.
Take a look at our other personal finance guides
If you found this guide helpful, make sure you check out some of our other helpful guides.
- Many people overpay on their tax each year by not applying for a tax refund. You can learn how to apply for a tax refund in this guide.
- And if you’re one of many people who work from home, take a look at this guide on e-worker tax relief.
- Thinking of switching to a different current account provider to save on monthly fees? We outline exactly how you can switch current accounts in this guide.
- Finally, if you’re planning a trip abroad we’d recommend looking at this article about how to avoid foreign exchange fees when travelling.
Get in touch
Do you have any questions about the local property tax? If so, feel free to get in touch and we’ll do our best to help.