The Gazette 1994

GAZETTE

JULY 1994

Payment of the tax

Total value of property owned by Mrs Brown £105,000. (£80,000 + £25,000 (1/2 share apartment)).

Commissioners subject to 75% of the assessment being paid. This condition is waived if the person in receipt of the assessment claims that the person is not an assessable person. If the Appeal Commissioners dismiss the appellant's appeal (e.g. if late), that is the end of the matter. If however the Appeal Commissioners confirm the assessment the appellant has a right to have the case re-heard in the Circuit Court and then on appeal to the High Court 24 . | Residential Property Tax is a relatively straightforward tax but with some anomalies. The writer hopes this article will assist practitioners in | advising clients not only in their compliance obligations but also on their potential liability to the tax when acquiring property and to plan their affairs accordingly. While the Revenue Commissioners will attempt to set aside any scheme devised solely to avoid Residential Property Tax, the legislation allows tax payers to organise their affairs in such a way Appendix 1. S.98(l) Finance Act, ("F.A.") 1983. 2. As defined by s.39(l)F.A. 1978 and s.19 F.A. 1982 as amended by s.19 F.A. 1994. 3. S.95(l) F.A. 1983. 4. S.95(2) (b) F.A. 1983. The list of liable persons is more extensive but for the purposes of this article only the main criteria are set out. 5. S.95(l) F.A. 1983. 6. If the property is being sold the RPT test is not applied. If as to minimise tax exposure especially where spouses are acquiring property. Conclusion

The tax is due and payable on 1 October 17 . The Finance Act, 1994 provides for an option to pay the tax by instalments. If payment is by instalments, an initial payment of 25% must be paid on 1 October. The balance together with a further 5% of the balance is then paid by ten monthly instalments 18 . If an instalment is missed, the outstanding balance, inclusive of the 5%, becomes immediately due and payable 19 . Tax payers wishing to avail of this option should consider payment of the instalments by way of ten post-dated cheques to avoid difficulties. The instalment procedure is not available where the tax is due under an assessment made by Revenue. The Revenue may on application concessionally postpone payment of the tax on terms that they think fit 20 . Where an instalment option is exercised no interest other than the initial 5% of the balance (i.e. tax due after payment of the initial payment) is payable by the tax payer 21 . The Revenue Commissioners may assess net market value of property 22 . If the Revenue Commissioners do not accept a tax payer's valuation of the property they will raise assessments based on whatever information is available to them. Where no return is made, an assessment will be made. The Revenue Commissioners will withdraw an assessment if an acceptable return is made within thirty days of the assessment. Where the tax payer disputes the Revenue Commissioner's valuation, an appeal may be lodged". The case is then submitted to the Commissioners of Valuation. If a tax payer is aggrieved by any other aspect of an assessment other than market value, an appeal within thirty days may be lodged to have the matter heard before the Appeal Making a return If the value of a relevant residential property exceeds the market value exemption every assessable person is obliged, under penalty, to submit a return before 1 October even if no tax is payable due to the income exemption.

Tax (£100,000 - £59,375) @ 1% = £406.25

Excess 5,000 (over £100,000) @ 1.5% = £75 Tax liability for Mrs Brown would be £481.25 Less child relief £48.12 Total tax payable by Mrs Brown £433.13 While Mrs Brown's income is less than £25,000, her husband's income will be aggregated with hers and vice versa on the basis that property owned by them was available for occupation by both. If Mrs Brown's son was not a student but had an income in excess of £25,000 there would be no liability for him as his exemption limit would exceed the value of his interest in the property which would be £25,000. His property exemption limit would be £37,500 which is calculated as follows:-

£50,000 x £75,000

x 1/2 = £37,500.

£50,000

Example 4

This example more clearly demonstrates the anomaly which can reduce the property exemption limit below £75,000. A, B and C buy a house jointly for £120,000 that they all reside in. Each has an income in excess of the income exemption limit. The calculation of each of their liabilities separately is as follows:-

property is residential in character or any part thereof and the value of the residential part exceeds £75,000 a clearance certificate is required. This anomaly should be borne in mind.

Share of property

£40,000

|

Property exemption limit £120,000 x £75,000

x 1/3 = £25,000

| 7. S.98(1)F.A. 1983. 8. S.95 F.A. 1983. 9. S.l 18 F.A. 1994 amending s.l 10 F.A. 1983. ! (Continued on page 30)

£120,000

Net market value over individual thresholds £15,000 Liability at 1% = £150.

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