HOMEOWNERS WHO BUILD modular homes in their back gardens will be liable to pay a separate local property tax on them because they will be classed as separate dwellings. 

The government has said that units of between 32 and 45 square metres in size in gardens at the back of people’s homes will be exempt from planning permission.

They will be able to be rented out privately under the Rent-A-Room scheme, where people can earn up to €14,000 tax-free each year.

But Revenue has confirmed that the units will be subject to local property tax, following a query from the Institute of Professional Auctioneers and Valuers (Ipav).

Under Section 2A of the Local Property Tax Act, ‘residential property’ means “any building which is in use as, or is suitable for use as, a dwelling”.

It states that the word ‘building’ includes “a structure or erection of any kind and of any materials, or any part of that structure or erection”, but excludes a structure that is not permanently attached to the ground.

In a statement to Ipav, seen by The Journal, Revenue said many property owners have garages, greenhouses, modular cabins and other structures on the site of their home, “all of which should be included when the property owners are making a true assessment of the correct value of the property”. 

“However, if one of those structures on the grounds of the property, is permanent in nature and is suitable for use as a separate dwelling in its own right, for example a garage converted into an area that can be used as a dwelling, a separate LPT charge then applies to that structure as it constitutes a property liable to LPT.”

It added: “Similarly, a modular home that is in use as, or is suitable for use as, a dwelling, will be liable to LPT in its own right and required to have its own Property ID and be valued independently.”

Ipav chief executive Genevieve McGuirk told RTÉ’s Today with David McCullagh that they sought clarification because under the current legislation, people that have a separate dwelling from their main residence are liable for local property tax on it. 

“With the new regulations of modular homes being exempt from planning permission, we just wanted to verify with Revenue that that fell under the same legislation,” she said. 

McGuirk said a modular home will be required to have its own Eircode and be valued independently.

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“If you were to sell your property, you obviously need to make sure that all your taxes are paid up to date, including your local property tax,” she said, adding that even if the modular home is unoccupied, it will still be liable for local property tax. 

McGuirk said after making an application for a separate Eircode for the unit, property owners must register it on Revenue’s website. 

“This would fall under the different bands, so obviously you will need to get a value on the modular home. But to be fair, the first band is up to €240,000, so it’s most likely that all modular homes will fall under the first tax band.”

Asked if people who have already built modular homes in their gardens should have been paying LPT all this time, McGuirk said: “Under the current legislation, that is correct.”

“There wouldn’t be that many people that would have a separate dwelling as it stands. This is really more coming to light because of the new regulations that are coming into place possibly before the [Dáil] summer recess.”