In terms of priorities, it’s fair to say that property tax is likely to be of minor concern to most in the midst of a pandemic. However, at a time when many people’s pockets are pinched, the last thing homeowners will want is an increase in yet another bill.
So, there is some good news on this front. Properties across the State were due to be revalued this November to bring valuations into line with current prices. It was a scary thought for many homeowners who will have seen sizeable increases in the value of their homes since the tax was first introduced back in 2013.
However, Minister for Finance Paschal Donohoe decided to postpone this yet again, until November 2021, which means that you won't see the impact of the new valuation – which has yet to be exactly determined – in your tax bill until this date.
This doesn’t, however, mean you will be paying less in your tax bill this year. In fact, depending on where you live, you might find that your liability will have jumped significantly.
This is because, like every year, councils can decide either to charge the basic local property tax (LPT) rate on residential properties in their area, or to increase or decrease it by up to 15 per cent, in what is known as the local adjustment factor.
With pressure on their finances and funding challenges on the back of Covid-19, it’s no surprise that out of the 31 local authorities across the Republic, 22 voted to increase rates for 2021.
Yes, there are some parts of the State where local authorities voted in discounts on property taxes for 2021
What’s important to note, however, is that just because your local authority voted to increase rates for 2021, this doesn’t necessarily mean that the amount of property tax which you pay will also rise. This is because, in many cases, property taxes were also increased in 2020. That means that, while homeowners in such areas will pay an elevated rate over the basic, it will be the same elevated rate and amount as 2020.
Where property tax is going down
First of all, the good news. Yes, there are some parts of the State where local authorities voted in discounts on property taxes for 2021. The bad news, however, is that only three local authorities did so – and they’re all in Dublin.
Best of all are South Dublin and Dublin City councils, which have both voted in decreases of 15 per cent.
This means that a house valued at €250,000 in either of these areas, which would normally incur property tax of some €495, will only be liable for tax of €420. Similarly, a house valued at €500,000 would normally have a charge of €945; in these areas, however, the tax will be some €142 cheaper at €803 a year.
Fingal, which covers areas north of Dublin city, has also cut its rates for 2021; however, the discount here is just 10 per cent. This means that a property worth €250,000 in Swords or Castleknock will incur a bill of €445, or €25 more than in Tallaght, while the €500,000 house will have a bill of €850, or €47 more than in the city centre.
But homeowners in these areas won’t notice a change in their liability this year, as the authorities applied similar discounts for 2020.
The non-movers
While most homeowners in Dublin will continue to see reduced payments (Fingal, South Dublin and Dublin city all agreed on the same discounts last year) those in the southern suburbs of Dún Laoghaire-Rathdown will pay more this year. This is because, even though the council did not put up rates, homeowners have got used to annual discounts of the order of about 15 per cent up to now.
The council said it couldn’t afford such a discount next year, due to the “catastrophic” impact of Covid-19 on its finances. Council officials had actually wanted an increase of 5 per cent, before settling on the base rate.
This decision is going to cost homeowners.
It means, for example, that a home in Blackrock worth €500,000, which would have had a bill of €803 last year (and every year since 2015), will see that rise by €142 to €945.
The area is home to some of the State’s most expensive properties, which means that some homeowners will experience even sharper jumps. A property in Killiney worth €1.5 million, for example, will see its tax jump substantially, by 15 per cent, from €2,592 to €3,050.
It’s not the only local authority to keep prices at the base rate. In Galway city and county, property taxes will neither rise nor fall in 2021. This time, however, keeping them at a steady rate won’t affect homeowners, as they didn’t enjoy a discount last year either. So, a €250,000 house with a €495 bill in 2020 will stay the same for 2021.
And in Wicklow, homeowners will actually get a bit of a reprieve, even if a discount hasn’t been applied. This is because last year, the council applied an increase of 10 per cent, pushing up the tax on a €250,000 home to €544. By applying the base rate this year, the amount owed on such a property will actually fall by €49.
Louth and Meath are the two other counties where neither a discount nor an increase will apply this year. As the base rate was also applied for 2020, homeowners in these counties will get the same bills for 2021.
Counties going up
Everywhere else, however, local authorities have voted to increase taxes by 15 per cent. This won’t always mean that homeowners get a bigger bill this year, as many counties will have availed of similar latitude last year.
Consider Limerick city and council. Homeowners have been paying an increased rate of property tax for some time here now, with increases applied, to varying degrees, every year since 2017. Last year, the council voted to increase rates by 15 per cent; this year, the rate will once again be 15 per cent.
This means that someone with a home worth €180,000 will again pay €362 next year, some €47 more than the base rate and €94 more than if the council had applied a 15 per cent discount.
Others will see a sharper increase. Last year, for example, Westmeath applied the base rate; this year it has voted in a 15 per cent increase. On a €150,000 house in the county, a homeowner will have to pay €47 more next year, or €362.
Similarly, Waterford city and county only applied an increase of 2.5 per cent last year; this year it will be 10 per cent. This translates to a €31 increase on a €150,000 house.
It’s the same in Mayo, where the base rate was applied last year, but will increase by 10 per cent this year, and Cavan, where rates will rise by 15 per cent.
Cork city, where property taxes will be a bit higher than nationwide norms, given stronger house prices, will thus see one of the sharpest increases in the tax, after its council voted in an increase of 7.5 per cent, compared with no change last year.
It means that local property tax on a house worth €180,000 will cost €23 more this year, while a house worth €480,000 will be €64 more.
Location comparison
The changes mean there can now be significant differentials in how much a homeowner has to pay in property tax, depending on where they live. For example, in Sandymount, which is in Dublin city council, a €500,000 house will cost €803 to tax. But walk out the road a bit to Booterstown, and you’ll find a similar house with a heftier property tax liability, of €945.
This year, the liability date for LPT is November 1st. This means that, if you own a property on this date, then you are liable for property tax for next year
Or how about Meath versus Leitrim? In the former, a €180,000 home will cost €315 to tax next year, but this rises to €362 in the latter.
And you could save yourself almost €200 next year on a €700,000 home in Louth, where your tax will cost €1,305, over Limerick city, where the tax on a property in the same valuation band will be €1,500.
Overall, the “cheapest” locations for property tax are the three Dublin local authorities that apply the full 15 per cent discounts available. But, of course, higher property values in the capital means “cheap” is a relative concept when it comes to property tax.
Paying the tax
This year, the liability date for LPT is November 1st. This means that, if you own a property on this date, then you are liable for property tax for next year.
If you wish to pay the amount you owe in full, either in cash, or by cheque, postal order, credit or debit card, you must do so by January 11th, 2021. If your 2021 liability is paid by regular deductions, these too will start in January, with direct debit on your account commencing January 15th, 2021. Finally, if you wish to make one payment via a bank debit, this will happen on March 21st, 2021.
What about exemptions?
Given that the Government deferred the valuation date for property tax until November 2021, many homeowners, who have enjoyed an exemption from the tax since its inception, have been given a reprieve.
For example, those who bought a home in 2013 have been exempt from paying the tax due to a Section 8 exemption, and won’t now have to pay it until the 2022 tax year.
It was never the intention to grant such home-buyers a near 10-year reprieve. It has simply been an outcome of repeated failure by government to revalue properties.
As recently as June, Minister for Finance Paschal Donohoe told his officials that the tax needed to be reformed and that it was “untenable” to allow so many houses to continue avoiding having to pay.
A month later, the Revenue Commissioners, in discussions with the Department of Finance, said bringing those homes completed since 2013 into the tax net would yield at least €31.5 million to the tax take if they were retrospectively valued at their "hypothetical" 2013 value.
“One way or other, the Minister for Finance must legislate for this matter in 2020,” Mr Donohoe said in June as government formation discussions continued. “May be no harm to get legislation done now for a later revaluation date. A government with a majority must deal with this matter; I hope that I can.”
In the end, once again, the issue has been long-fingered. But, with a hefty bill mounting to meet the cost of Covid, homeowners can expect that the issue will be firmly on the agenda once the economy is back up and running.
