Local property tax - 1 Nov liability date

Jonathan222

Hello,

Looking to sell my house and been onto the LPT office, who advised that if I sell the house, after 1 Nov, that i will be liable for the whole of 2020 lpt tax, and it should be cleared before selling the house.

So, if I sell on 31 Jan 2020, I must pay for the remaining 11 months even though I wont own the house. The LPT office did say that I could add a special condition to the contract that the purchasers will reimburse me (for the months I won't be in the house).

Looking to see if anyone has any experience in this kind of situation and best way to go about it.

Thanks.

L1011

The advice is correct. Purchaser will likely see such a clause as petty but its unlikely to kill a sale

Jonathan222

L1011 wrote: »

The advice is correct. Purchaser will likely see such a clause as petty but its unlikely to kill a sale

Thanks for that. If anyone could share some generic wording to cover such a clause would be appreciated.

Creamy Goodness

I'd strongly suggest you talk to your solicitor and get them to word this. no offence to people who post here but I wouldn't put trust into something someone here came up with.

Jonathan222

Creamy Goodness wrote: »

I'd strongly suggest you talk to your solicitor and get them to word this. no offence to people who post here but I wouldn't put trust into something someone here came up with.

Yes, absolutely will discuss with them, but just wanted to go to them with some draft wording as a starter.

Creamy Goodness

don't worry they'll come up with the wording, you are paying them after all. Just say 'hey I'm paying LPT on this property and I want to recoup the cost can you ensure there's a clause in the contract?'

Stratvs

Jonathan222 wrote: »

Yes, absolutely will discuss with them, but just wanted to go to them with some draft wording as a starter.

The Law Society have guidance here. Standard contracts for sale have been amended to reflect this issue. So a wording has already been agreed.

https://www.lawsociety.ie/Solicitors/Practising/Practice-Notes/Local-Property-Tax/#.XZ3D6FVKjIU

guppy

Jonathan222 wrote: »

Yes, absolutely will discuss with them, but just wanted to go to them with some draft wording as a starter.

I don't think that's necessary. I bought in June and had to include the value of the tax from July on in our transfer of fees etc to our solicitor. Her attitude to it made me think it was part and parcel of every day selling, so I'm sure your solicitor will be well used to including that.

XsApollo

Going through this now myself as a buyer and wording in the contract states any property tax paid shall be reimbursed before closing.

It’s a bit petty considering it’s about 8 euro a month, so 2 months is about 16euro.
But whatever.

wench

Oh, never fear, the law society quickly came up with a standard clause to add to contracts to bilk the buyer for more money

https://www.lawsociety.ie/Solicitors/Practising/Practice-Notes/Local-Property-Tax/#.XZ3E4mYo-Uk

unhappyBB

I got caught for surprised by this when I bought my house.
The first I heard of it was when I saw it in the breakdown of my solicitors fees at the very end. Did think it was kind of petty but what can you do.

Jonathan222

XsApollo wrote: »

Going through this now myself as a buyer and wording in the contract states any property tax paid shall be reimbursed before closing.

It’s a bit petty considering it’s about 8 euro a month, so 2 months is about 16euro.
But whatever.

I wouldn't bother with 2/3 months, but if you sell in mid Nov your talking a full 12 months so I would look for that

stoneill

Pay it in one go and add it to the price of the house.

Jonathan222

XsApollo wrote: »

Going through this now myself as a buyer and wording in the contract states any property tax paid shall be reimbursed before closing.

It’s a bit petty considering it’s about 8 euro a month, so 2 months is about 16euro.
But whatever.

Your purchase might be done before the 1 Nov deadline, so hence only 2 months to discuss

XsApollo

I know that, I’m just saying it states reimbursement of property tax before closing.
Wether its a year or 2 months it doesn’t matter.

Jonathan222

unhappyBB wrote: »

I got caught for surprised by this when I bought my house.
The first I heard of it was when I saw it in the breakdown of my solicitors fees at the very end. Did think it was kind of petty but what can you do.

How did that work?. Did your solicitor pay the vendor on your behalf prior to closing?

SozBbz

Jonathan222 wrote: »

How did that work?. Did your solicitor pay the vendor on your behalf prior to closing?

You've got the order of events wrong.

The solicitor looks for all the buyers money to be depositied in their client account before closing. The LPT will be on the bill, so the buyer has to give over the money for everything including the LPT before closing.

FWIW, I've bought twice now and the vendors solicitor has included this in their contracts both times, so I was expecting it this time even though my solicitor didnt point it out.

I can seem petty if you weren't expecting it, but I suppose its fair overall.

If you wanted to fight about it, it would just be another negotiable, but my sense of it is that its typically a small sum in relation to all the other costs. If LPT were higher (more like UK property tax) then you might see people falling out over it more, or seeking clarity at an earlier point in the process.

StoptheClocks

This is standard. You will have to pay it and get it refunded. This happened to me. My solicitor pointed it out to me before I put the house up for sale. The purchaser's solicitor should insist that it's paid before the house is sold.
I believe this doesn't apply if the house is a new build.

Jonathan222

StoptheClocks wrote: »

This is standard. You will have to pay it and get it refunded. This happened to me. My solicitor pointed it out to me before I put the house up for sale. The purchaser's solicitor should insist that it's paid before the house is sold.
I believe this doesn't apply if the house is a new build.

So not necessarily added to house price, but paid after the fact separately seeing as you go sake agreed before draft contracts are sent out?

StoptheClocks

Yes, It isn't added or included in the house price. It's calculated on closing. The sale can be delayed. So if it's held up until February. You'll get 11 months refunded. Double-check this with your solicitor. The purchaser's solicitor should have pointed this out to their client, so they're not surprised with the added cost.

Jonathan222

Last question on this.

Who actually transfers the property on the LPT system itself, via the 'transfer property' option?

Dolbhad

Jonathan222 wrote: »

Last question on this.

Who actually transfers the property on the LPT system itself, via the 'transfer property' option?

Whoever owns the house on liability date in November is liable for the following year. If you own the house at the date in November 2019, you owe revenue the LPT money for 2020. That’s how revenue see it. They don’t care if you sold the house in December 2019. So it’s standard for the sellers to pay it and be reimbursed on closing for part of the year the purchasers own it. Protects both parties. For the seller, by paying it directly and not relying on Purchaser paying it afterwards, they know it’s paid and Revenue won’t come after them. For the purchasers, since lpt attaches to the property as a charge (Unlike a utility bill) having it paid before closing before and reimbursing the sellers, they know it’s in order.

Don’t worry about the drafting in contract. That’s the solicitors job. It may be only worth a few euro but it’s done that way to protect both parties.

The deed of transfer needs to be stamped within 30 days with revenue. Stamp duty is linked with the lpt property ID number and the date of closing. That signals to revenue ownership as changed. Seller is locked out of lpt online and purchaser needs to request their new pin.

Jonathan222

Dolbhad wrote: »

Whoever owns the house on liability date in November is liable for the following year. If you own the house at the date in November 2019, you owe revenue the LPT money for 2020. That’s how revenue see it. They don’t care if you sold the house in December 2019. So it’s standard for the sellers to pay it and be reimbursed on closing for part of the year the purchasers own it. Protects both parties. For the seller, by paying it directly and not relying on Purchaser paying it afterwards, they know it’s paid and Revenue won’t come after them. For the purchasers, since lpt attaches to the property as a charge (Unlike a utility bill) having it paid before closing before and reimbursing the sellers, they know it’s in order.

Don’t worry about the drafting in contract. That’s the solicitors job. It may be only worth a few euro but it’s done that way to protect both parties.

The deed of transfer needs to be stamped within 30 days with revenue. Stamp duty is linked with the lpt property ID number and the date of closing. That signals to revenue ownership as changed. Seller is locked out of lpt online and purchaser needs to request their new pin.

Very comprehensive, thanks.

So if I close the sale in say Dec 2019, the purchasers will effectively owe me for the full 12 months of 2020, once I pay it before closing of course. (not going to argue over the final lpt payment for Dec 19 as that would be petty imo)?

Fol20

In my deals since lpt came in. It has always been a. Pro rata split that solicitors calculate which seems fair to me. That’s from both seller and buyer POV.

Dolbhad

Jonathan222 wrote: »

Very comprehensive, thanks.

So if I close the sale in say Dec 2019, the purchasers will effectively owe me for the full 12 months of 2020, once I pay it before closing of course. (not going to argue over the final lpt payment for Dec 19 as that would be petty imo)?

That’s correct. Your solicitor will have in contract LPT will be apportioned between the parties on closing. Your solicitor will do an LPT apportionment account then once a closing date is agreed. Your solicitor may round up by the week or month to make it easier. They won’t spend time working it out to final cent.