Property tax and renting: Who pays?

Augmerson

Hello all. I wanted to put a question to some of the more knowledgeable heads out there. I recently was talking to my landlord, who said that the tenant's will have to pay the upcoming property tax. I will admit to not being up-to-date on the issue, and so I'm going about finding info now.

I would have imagined that the property tax was to be paid by the owner of the property. Am I wrong on this?

markpb

Revenue expect the property owner to pay the tax. If you receive a letter from them, you should return it filling in your landlords details.

The only exception to this would be if your lease states that you are liable for it.

Augmerson

markpb wrote: »

Revenue expect the property owner to pay the tax. If you receive a letter from them, you should return it filling in your landlords details.

The only exception to this would be if your lease states that you are liable for it.

Would my lease say that I am liable to all excess charges or actually define property tax as a charge I have to pay?

K.Flyer

I would imagine that the tenants are going to end up paying for it on the signing of new leases.
The amount of tax divided by 12 = how much your rent will go up by per month.

sunnysoutheast

Augmerson wrote: »

Would my lease say that I am liable to all excess charges or actually define property tax as a charge I have to pay?

Well it may have a clause along the lines of "...tenant must pay....local authority charges....even of a novel nature...." or similar, but the reality is that the charge as it stands is levied by the Revenue on the property owner.

Depending on the particular nature of the property and the local market conditions, I would expect the charge to be bundled into a periodic rent review or on the commencement of a new tenancy. I doubt many sensible landlords would disturb a good tenant unless they are very confident of a quick re-letting.

There is some confusion at present as to whether the landlord will be able to claim the property tax against their gross rental income. At present this is not allowable.

Of course, any sane system would have the consumer, i.e. the tenant, responsible for the payment for local services from which they benefit although I admit that applying the charge on the property owner may weed out some of the cash-in-hand landlords.

Augmerson

Found this -

Revenue.ie wrote:

http://www.revenue.ie/en/tax/lpt/liable-persons.html

Who is liable?

The following persons are liable to pay the Local Property Tax (LPT). These are known as "liable persons":

Owners of Irish residential property, regardless of whether they live in Ireland or not.
Local authorities or social housing organisations that own and provide social housing.
Lessees who hold long-term leases of residential property (for 20 years or more).
Holders of a life-interest in a residential property.
Persons with a long-term right of residence (for life or for 20 years or more) that entitles them to exclude any other person from the property.
Landlords where the property is rented under a short-term lease (for less than 20 years).
Personal representatives for a deceased owner (e.g. executor/administrator of an estate).
Trustees, where a property is held in a trust.
Where none of the above categories of liable person applies, the person who occupies the property on a rent-free basis and without challenge to that occupation.
If you are the liable person in respect of the property you are responsible for completing and submitting the Return and paying the tax due.

For LPT purposes, residential property means any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling and includes any shed, outhouse, garage or other building or structure and includes grounds of up to one acre.

If you own a residential property on 1 May 2013, you are liable for LPT for 2013. If you sell your property after 1 May 2013 you are still liable to LPT for 2013 and the liability is payable in full at the time of the sale.

Where there is more than one owner of the residential property, they need to agree who will make the relevant LPT Return and pay the tax. If no one pays, Revenue can proceed to collect the tax due from any of the owners.

gurramok

Doesn't matter what Revenue say Augmerson, I had a long debate here about this a few months ago. Lots of landlords back then say they will pass it on as an expense for renting out property.

TwoShedsJackson

The landlord is liable for it. Of course most of them will attempt to recoup by increasing the rent to cover it. It is then up to the tenant to decide whether or not to accept this increase, but given that rents generally will rise, you're going to be paying your landlord's property tax almost wherever you are.

You certainly aren't liable for it as things stand now.

Zulu

The landlord is liable, but in reality that means little.

I'm both a landlord & tenant. My landlord rang us looking to put up the rent €50 per month. Recent reports in the media of rental values rising, I'm sure, gave her the notion. "The property tax, and increase to costs" was what she cited as her reason. Thankfully another property became available around the corner, so I was able to talk her down. That said, I now have seen that she has little/no appreciation for steady, good, long term tenants so we are constantly looking and will move once the opportunity arises. Her greed = her loss.

As a landlord, I will not be passing on the cost to my current tenants, but once they move out/finish renting my property I'll be upping my asking rent by €50 - €100. I'm confident I'll get €50 so I may try €100. Ultimately the tenants will be paying it.

gurramok

TwoShedsJackson wrote: »

The landlord is liable for it. Of course most of them will attempt to recoup by increasing the rent to cover it. It is then up to the tenant to decide whether or not to accept this increase, but given that rents generally will rise, you're going to be paying your landlord's property tax almost wherever you are.

You certainly aren't liable for it as things stand now.

And its passed on, tenant is liable to landlord. Discussed already, pretty adamant from landlords that they will pass it on. http://www.boards.ie/vbulletin/showthread.php?t=2056809208

Rasmus

Even if the tenant pays the property tax by way of an increase in rent, it does not make them liable for the tax. The owner of the property is liable for the property tax, full stop. LL is subject to revenue charges, with the exception of the cases listed above.

Gatling

I can see this been open to abuse by some landlords ,I remember seeing an article where some landlord association told its members that if the government brought in a 100e property tax they should pass on the tax by charging the tenant's an extra 400e over their 12 month's ,how they came to this is a mystery ,if its for local council's they the landlord benefits too or am I missing something

TwoShedsJackson

gurramok wrote: »

And its passed on, tenant is liable to landlord. Discussed already, pretty adamant from landlords that they will pass it on. http://www.boards.ie/vbulletin/showthread.php?t=2056809208

I know but the way the OP has phrased his post, it seems that his landlord may think his tenant is simply liable for the tax, as opposed to the landlord putting up the rent to cover it, which he is fully entitle to do, just as the tenant is entitled to decline to pay the increased rent and seek alternative accommadation.

Gatling

Can see a legal challenge at some stage ,
Rent increase to cover tax of 100e only means an extra 8e a month over the year ,won't have a problem paying that certainly wont be paying 20 ,30,e or more a month

djimi

As a tenant is there somewhere that we will be able to see how much property tax is to be paid on the property that we rent? I fully expect that this cost will be passed onto tenants, but I also fully expect that a lot of landlords will look to abuse this.

TwoShedsJackson

All you have to do is estimate the value, which won't be hard, and then check the Revenue site.

BostonB

djimi wrote: »

As a tenant is there somewhere that we will be able to see how much property tax is to be paid on the property that we rent? I fully expect that this cost will be passed onto tenants, but I also fully expect that a lot of landlords will look to abuse this.

The only way to pass this on is with a rent increase and the LL is limited to how much he can increase that. The only way a tenant will be caught by it, is if they don't know their rights.

djimi

Ah right, wasnt sure how it works. Its actually a lot less than I had thought it would be.

djimi

BostonB wrote: »

The only way to pass this on is with a rent increase and the LL is limited to how much he can increase that. The only way a tenant will be caught by it, is if they don't know their rights.

It depends on how much the increase is. A full year for my property should work out at less than €40 a month, which is certainly within the realms of possibility for an increase.

I guess considering most landlords will look to pass the increase onto their tenants it is going to mean that rents will rise across the board, making looking for a rent increase a bit easier for landlords.

Crimson King

It's an extra expense to the LL every year, and like anyone with investments they will try to pass on these expenses to the tenant. Supply and Demand will dictate how much, if any they can pass on.

The LL is entitled to change the price of new leases how they see fit, as is the right of the tenant to say yes or no to signing the new lease. People who are already on signed leases and had a price agreed to pay do not have to budge and refuse to pay any additional charges to what was agreed, as per their leases. Some leases take into account such extra charges, I suggest reading your lease agreement carefully Augmerson.

It all depends on what your relationship with your LL is like, how much you want to stay in your place and what the local market is like. Personally I would shop around if I rented, however my wife would hate to move every few years and pay the extra €20 a month or so. It's a personal thing really.

BostonB

As you say I don't think there are any limits to how much a new lease is. The only limits are on existing lease rent increases. Of course this tax will only increase.

Much like the property tax though, its kinda hard to pinpoint what makes one property worth more than another. Thus comparing rents is a little bit subjective.

snausbaby

markpb wrote: »

Revenue expect the property owner to pay the tax. If you receive a letter from them, you should return it filling in your landlords details.

The only exception to this would be if your lease states that you are liable for it.

Just received Revenue letter, as a tenant it appears I have to prove I am not liable. Only have the first lease for one year which was 6 years ago and a schedule of payments from the agent, which I presume will do.

Does this mean that the Landlord has not registered our tenancy or declared the rental income?

Uriel.

snausbaby wrote: »

Just received Revenue letter, as a tenant it appears I have to prove I am not liable. Only have the first lease for one year which was 6 years ago and a schedule of payments from the agent, which I presume will do.

Does this mean that the Landlord has not registered our tenancy or declared the rental income?

No not necessarily. Just may not have paid the household charge. Was the letter addressed to you specifically or "the resident"

Of course If he hasn't declared the rental income previously he may just about to enter a world of pain

snausbaby

Uriel. wrote: »

No not necessarily. Just may not have paid the household charge. Was the letter addressed to you specifically or "the resident"

Of course If he hasn't declared the rental income previously he may just about to enter a world of pain

The letter was addressed specifically. With regards the integrity and honesty of our Landlord, he works in banking so who knows!

Uriel.

snausbaby wrote: »

The letter was addressed specifically. With regards the integrity and honesty of our Landlord, he works in banking so who knows!

Could be a number of things. Revenue are using multiple sources. Eg. If you ever had a TV licence at this address you might get a letter. Entirely possible both you and the landlord got letters as there will be a certain amount of duplication in such a mailshot

Victor

Note that the combination of the NPPR charge and the household charge amount to €300 in 2012.

In the current year, the property would need to be worth more than €150,000 for the landlord's tax burden to increase materially (for €100,001-150,000 it increases by €12.50/year) and that increases to €200,000 from 2014.

Should people renting properties below those values seek rent reductions?

StillWaters

snausbaby wrote: »

Just received Revenue letter, as a tenant it appears I have to prove I am not liable. Only have the first lease for one year which was 6 years ago and a schedule of payments from the agent, which I presume will do.

I'd imagine that will suffice as proof.

Akiv89

I have a clause in my lease agreement that tenant is liable for paying "local authority charges ... including any which are imposed after the date of the lease agreement (even if of a novel nature)". Hence the question: Is property tax a local authority charge? and Will I as a tenant be liable for paying it to the Revenue?

Victor

Akiv89 wrote: »

I have a clause in my lease agreement that tenant is liable for paying "local authority charges ... including any which are imposed after the date of the lease agreement (even if of a novel nature)". Hence the question: Is property tax a local authority charge? and Will I as a tenant be liable for paying it to the Revenue?

Take a look at the graphs above. As a tenant, I wouldn't tolerate having to pay it unless the individual unit is worth at least €150,000. In the calculation of any rent review, I would also take the paying of LPT by the tenant into account - however, the over-riding factor ina rent review is the market rate (which would be affected by LPT liability).

djimi

Akiv89 wrote: »

I have a clause in my lease agreement that tenant is liable for paying "local authority charges ... including any which are imposed after the date of the lease agreement (even if of a novel nature)". Hence the question: Is property tax a local authority charge? and Will I as a tenant be liable for paying it to the Revenue?

Im fairly sure that you can ignore that to be honest. The charge is the landlords responsibility; they cant pass it on to you (directly), even if they want to chance their arm writing otherwise into the lease.

ladysarah

i am a landlady and the property tax is paid by THE OWNER not the tenant. now there is nothing stopping him increasing the rent but he/she cannot increase it above market rent. DO NOT pay the property tax.

djimi

ladysarah wrote: »

i am a landlady and the property tax is paid by THE OWNER not the tenant. now there is nothing stopping him increasing the rent but he/she cannot increase it above market rent. DO NOT pay the property tax.

He/she also cannot raise the rent while a fixed term lease is in effect.

ladysarah

i know that i am not suggesting rhat. i only states the landlord may try to raise the rent but only to market value. even in the absense of a lease they may inly raise it legally once a year.

Lyn256

One thing to note, if the tax is not paid, the revenue will pursue the property owner and not the tenant.

There doesn't seem to be a comprehensive database of owners of properties that the revenue can use to locate property owners, hence why tenants are getting the letters - they are also making the people to whom the letter is addressed pay the tax or name the actual owner (not sure if it would stand up in court)-I think that this is to flush out the actual owners.

An example, my friend received a property tax demand for her parents property so she simply returned it with their names.

As a tenant, even if your landlord insisted I just wouldn't pay it. They'll be the ones to pay the fines and penalties!

Akiv89

Lyn256 wrote: »

One thing to note, if the tax is not paid, the revenue will pursue the property owner and not the tenant.

As a tenant, even if your landlord insisted I just wouldn't pay it. They'll be the ones to pay the fines and penalties!

Of course, it would be silly for tenant to pay it, but what if landlord or his agent simply deduct it from the security deposit? Are there any legal grounds to bring a landlord to court and get the money back?

BostonB

Akiv89 wrote: »

Of course, it would be silly for tenant to pay it, but what if landlord or his agent simply deduct it from the security deposit? Are there any legal grounds to bring a landlord to court and get the money back?

Yes. The deposit can't be used for that.
If a LL tried that you could go to the PRTB and get it back.