Is the tenant liable for Property tax if it is in the Rent contract?

kevincool · 12-11-2015 06:14PM #1

Hi,
I have it in my rent contract that I have to pay the LPT(Local Property TaX) FOR my apt. So is it legal for the tenant to pay the LPT if it is in the contract?

Atlantic Dawn · 12-11-2015 06:15PM

The owner of the property is legally required to pay it, they are liable, nobody else.

kevincool · 12-11-2015 06:23PM

Thanks for the reply. I made the payment for LPT for the last year so can I get the money back from the landlord?

gerrybbadd · 12-11-2015 06:25PM

kevincool wrote: »

Thanks for the reply. I made the payment for LPT for the last year so can I get the money back from the landlord?

Yes. Ring LPT, and let them know your not the registered owner. Otherwise, you'll still be contacted in relation to the property even after the tenancy ceases

kevincool · 12-11-2015 06:28PM

I paid it to the Landlord. He sent me the invoice for LPT for last year. I paid it three months back. But he gave me a different bank account rather than his for the LPT money, this made me suspicious.

L1011 · 12-11-2015 06:44PM

You're not liable but they'll likely increase your rent by an identical amount per year if they've decided they want it over and above the current rent.

Pawwed Rig · 13-11-2015 01:36AM

I would consider this to be extra rental income for the LL and therefore taxable.

kevincool · 13-11-2015 09:06AM

I will ask the landlord to give the money back otherwise I will complain to the PRTB. I will be vacating in one month so rent increase will not matter to me.

barneystinson · 13-11-2015 09:54AM

I think there's a fundamental misunderstanding on your part about what's going on OP.

You are NOT paying the LPT. You've clearly said your landlord paid the LPT. You've simply paid him an amount equivalent to HIS LPT liability. I see no reason why a properly drafted lease agreement can't allow for such a situation.

As Pawwed Rig said above, it is just additional rental income in his hands.

Graham · 13-11-2015 10:01AM

barneystinson wrote: »

I think there's a fundamental misunderstanding on your part about what's going on OP.

You are NOT paying the LPT. You've clearly said your landlord paid the LPT. You've simply paid him an amount equivalent to HIS LPT liability. I see no reason why a properly drafted lease agreement can't allow for such a situation.

As Pawwed Rig said above, it is just additional rental income in his hands.

If it is additional rental income then surely the additional payment would constitute a rent increase with all of the advanced notice requirements and PRTB recourse options that a rent increase entails.

Edit: just spotted it was already included in the contract so wouldn't be a rent increase.

kevincool · 13-11-2015 10:08AM

barneystinson wrote: »

I think there's a fundamental misunderstanding on your part about what's going on OP.

You are NOT paying the LPT. You've clearly said your landlord paid the LPT. You've simply paid him an amount equivalent to HIS LPT liability. I see no reason why a properly drafted lease agreement can't allow for such a situation.

As Pawwed Rig said above, it is just additional rental income in his hands.

He sent me an email for LPT after calculating the amount based on my apt. Area. When an amount if paid towards LPT to a landlord then why can't I get the money back. I will ring the PRTB today and will let you all know the outcome.

kevincool · 13-11-2015 10:09AM

Also rent was increased by 100 euros after one year without any development to the property.

L1011 · 13-11-2015 10:11AM

kevincool wrote: »

Also rent was increased by 100 euros after one year without any development to the property.

Rent can reviewed once annually to the market rate, doesn't need improvements to the property. The LPT as recharged to you is effectively another increase, though.

Alan Shore · 13-11-2015 10:44AM

kevincool wrote: »

Hi,
I have it in my rent contract that I have to pay the LPT(Local Property TaX) FOR my apt. So is it legal for the tenant to pay the LPT if it is in the contract?

So you have an agreement to pay say €750 per month in rent and €200 annually for Property Tax which you presumable read, agreed to and signed.

Now explain the issue? It could just as easily say rent of €767 per month.

Edit: or perhaps it did not specify how much the LPT was and you signed up to pay whatever the bill was.

kevincool · 13-11-2015 10:47AM

Alan Shore wrote: »

So you have an agreement to pay say €750 per month in rent and €200 annually for Property Tax which you presumable read, agreed to and signed.

Now explain the issue? It could just as easily say rent of €767 per month.

Edit: or perhaps it did not specify how much the LPT was and you signed up to pay whatever the bill was.

Everything which is read and signed need not be legal. That's the reason I'm asking that is this legal. Hope you got your explanation.

The_Morrigan · 13-11-2015 10:57AM

kevincool wrote: »

Everything which is read and signed need not be legal. That's the reason I'm asking that is this legal. Hope you got your explanation.

RTA 2004 - Section 16 (a) ii

16.—In addition to the obligations arising by or under any other enactment, a tenant of a dwelling shall—

(a) pay to the landlord or his or her authorised agent (or any other person where required to do so by any enactment)—

(i) the rent provided for under the tenancy concerned on the date it falls due for payment, and

(ii) where the lease or tenancy agreement provides that any charges or taxes are payable by the tenant, pay those charges or taxes in accordance with the lease or tenancy agreement (unless provision to that effect in the lease or tenancy agreement is unlawful or contravenes any other enactment),

The law allows for it - check your lease.

http://www.irishstatutebook.ie/eli/2004/act/27/enacted/en/print#sec16

Bob24 · 13-11-2015 11:01AM

I don't know if the contract is legal, but what is for sure is that if your landlord did no pay income tax on the money you gave him towards the LPT he did something illegal.

Is the contract clear about how your LPT contribution will be calculated. Did your landlord provide the details of how he calculated the amount he charged you, and does it match the contract?

And does the contract specify if the LPT will be pay directly by you to Revenue or to the landlord?

Bob24 · 13-11-2015 11:10AM

The_Morrigan wrote: »

The law allows for it - check your lease.

If correct, is the law not a bit inconsistent?

Lets say the LPT is 300 euros and the landlord is on a 50% tax rate.

If the landlord pay the LPT themselves they effectively need to increase the rent by 600 euros to cover it (300 towards income tax for the additional rent received, and 300 towards the LPT).

If they get the tenant to pay it directly its just a 300 euros increase for the tenant and no additional tax for the landlord, so at the end of the day the tax man is 300 euros short (and the tenant 300 euros better off).

In that case why would any landlord pay the LTP themselves rather than asking the tenant to do it?

The_Morrigan · 13-11-2015 11:42AM

Bob24 wrote: »

If correct, is the law not a bit inconsistent?

Lets say the LPT is 300 euros and the landlord is on a 50% tax rate.

If the landlord pay the LPT themselves they effectively need to increase the rent by 600 euros to cover it (300 towards income tax for the additional rent received, and 300 towards the LPT).

If they get the tenant to pay it directly its just a 300 euros increase for the tenant and no additional tax for the landlord, so at the end of the day the tax man is 300 euros short (and the tenant 300 euros better off).

In that case why would any landlord pay the LTP themselves rather than asking the tenant to do it?

The payment of charges within the lease (water rates, property tax etc) is not part of the rent figure and should be kept separate - that is why they are dealt with on an individual basis within the act. If they were to be combined there would be no need for a distinction between them.

Some landlords will pay all their charges on a property themselves others will incorporate them into the lease agreement as permitted by the RTA 2004 and have the tenant pay them.

The treatment of the landlords tax affairs are not dealt with under the tenancy legislation and I'll be honest I think this thread is misplaced in that regard. The OP is asking a legal question on who is responsible for paying the rates.

Bob24 · 13-11-2015 12:16PM

Water or electricity charges are not the same thing as local property tax though.

Regardless of who is paying the charges it won't change the amount of income tax due by the landlord (as if they pay for it themselves they can deduce it from their taxable income as an expense) whereas it does make a difference in the case of the LPT (which is not a maintenance charge and can't be deduced from your taxable income).

Based on this it makes it tricky for the landlord to include a proxy LPT payment (such as what the OP mentioned) in the lease in my opinion: if you ask the tenant to pay the exact property tax amount you are due it will actually not cover your LPT in full as you will have to pay income tax on what the tenant is paying you. And if you want the tenant to pay your whole property tax (i.e. what they give you minus the income tax you pay on it covers your LTP) you would have to make some calculations and disclose your tax affairs to your tenant as a proof that you are charging them the right amount.

The_Morrigan · 13-11-2015 08:49PM

Bob24 wrote: »

Water or electricity charges are not the same thing as local property tax though.

Regardless of who is paying the charges it won't change the amount of income tax due by the landlord (as if they pay for it themselves they can deduce it from their taxable income as an expense) whereas it does make a difference in the case of the LPT (which is not a maintenance charge and can't be deduced from your taxable income).

Based on this it makes it tricky for the landlord to include a proxy LPT payment (such as what the OP mentioned) in the lease in my opinion: if you ask the tenant to pay the exact property tax amount you are due it will actually not cover your LPT in full as you will have to pay income tax on what the tenant is paying you. And if you want the tenant to pay your whole property tax (i.e. what they give you minus the income tax you pay on it covers your LTP) you would have to make some calculations and disclose your tax affairs to your tenant as a proof that you are charging them the right amount.

Charges and taxes paid by tenants or landlords are treated differently with regards to the treatment of tax. That however is not the question from the op, who simply asked if it was legal for them to be contained within the lease. As per the clause I quoted above, it is and they are both mentioned as allowable within a lease under tenancy law.
Sometimes having the tenant pay a tax is more about convenience than making a profit, take for instance a non resident landlord. The tenant is supposed to withhold 20% in that instance, most tenants and some landlords are unaware of that fact but the RTA is so vague that clause 16 covers that or any type of charge or tax that a landlord wishes to include as the responsibility of the tenant.

Arbiter of Good Taste · 13-11-2015 09:49PM

kevincool wrote: »

Everything which is read and signed need not be legal. That's the reason I'm asking that is this legal. Hope you got your explanation.

Of course it is legal. He's not relinquishing his obligation, you just happened to agree to pay an extra amount equal to those costs.

godtabh · 13-11-2015 09:51PM

Pawwed Rig wrote: »

I would consider this to be extra rental income for the LL and therefore taxable.

all rental income is taxable

kevincool · 13-11-2015 10:55PM

I got my answer. So it's legal to pay the property tax by a tenant if it is in the contract.
Thanks for all the replies.

Is the tenant liable for Property tax if it is in the Rent contract?

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