The Gazette 1994

252 / 432

GAZETTE JULY 1994
Total value of property owned by Mrs
Brown £105,000. (£80,000 + £25,000
(1/2 share apartment)).
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:-
Share of property £40,000
Property exemption limit
£120,000 x £75,000
x 1/3 = £25,000
£120,000
Net market value over individual
thresholds £15,000
Liability at 1% = £150.
Payment of the tax
The tax is due and payable on 1
October17. 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 instalments18. If an instalment
is missed, the outstanding balance,
inclusive of the 5%, becomes
immediately due and payable19. 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 fit20.
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 payer21.
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.
The Revenue Commissioners may
assess net market value of property22. 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
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 Court24.
Conclusion
| 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
as to minimise tax exposure
especially where spouses are
acquiring property.
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
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.
| 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.
!
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