THE REVENUE COMMISSIONERS are set to repay thousands of homeowners after confusing wording of the Local Property Tax (LPT) legislation gave a three-year exemption to all homeowners who bought in 2013.
It’s believed the property tax refund will cost the Revenue millions of euros.
In a statement this morning from the Revenue Commissioners, they stated that the local property tax legislation provides for a number of exemptions, two of which are:
- An exemption in respect of new houses purchased from a builder or property developer
- An exemption for buyers of any house whether new or second-hand, where the house is then occupied as the buyer’s sole or main residence.
The Commissioners referred to the second clause on exemptions in the Local Property Tax legislation which, they said, clearly intended to apply to first time buyers.
The second exemption also applies up to 2016 but only as long as the house is occupied as the purchaser’s sole or main residence. The exemption cannot pass to any subsequent purchaser.
First time buyer
“It was originally intended that this second exemption would only apply to first time buyers, which is clear from the head note to the section (Exemption for first-time buyers). The Explanatory Memorandum to the Finance (Local Property Tax) Act clearly states that the exemption applies to first-time buyers and this was the clear intention of the exemption,” they stated.
However, read literally, the exemption benefits not just a first time buyer, but all buyers.
The statement continued, by recalling that the Mortgage Interest relief which was phased out on mortgages taken out after 31 December 2012, stating that “this measure was a transitional provision to help first-time buyers in the first year after the abolition of Mortgage Interest relief”.
They added the wording of the legislation, drafted by the Department of Finance, read literally, gives the exemption to any buyer, not just a first time buyer.
“The result is that a person who purchases a second hand house and occupies it as a sole or main residence is entitled to the exemption regardless of the fact that they are not a first time buyer,” they stated.
Having reviewed the legislation, Revenue concluded that, “notwithstanding the fact that the intention was clear, the legislation did not impose a liability to LPT on a non-first time buyer of a second–hand house,” they said.
The Revenue said they will now try and identify the people concerned by matching LPT data with stamp duty records.
We have concentrated on trying to identify two groups of people:
Those who bought before 1 May 2013 and may have wrongly paid the 2013 LPT and who will not have a liability for 2014 to 2016, and those who bought after 1 May and who will not have a liability for 2014 to 2016.
The vendor in these cases would have been liable to the 2013 charge.
They added that they will write to these people as soon as possible advising them that they may qualify for an exemption subject to meeting the conditions of the exemption.