ROI Property Taxes for Non-Resident Owners
Published 6 December 2018
In this article we discuss issues arising when a person, not ordinarily resident in ROI and not holding a PPS Number (the ROI version of a National Insurance Number) seeks to sell or buy, grant or take a lease of ROI property.
Before 2009, an individual did not need to have a PPS number when dealing with ROI located property. A PPS number is allocated by the Irish Government (via the Department of Social Protection) to persons who work (and so pay PAYE and PRSI) or who claim social welfare benefits in ROI. However, for persons who own ROI property but who have always worked in the UK, an issue arose in that from 2009 onwards, persons with such an interest in ROI property needed to have PPS numbers to register for Certificates of Exemption and/or Certificates of Discharge for Non Principal Private Residence Charge (“NPPR Charge”) and obtain receipts for payment of Household Charge and Local Property Tax.
Therefore, PPS numbers are needed by all parties to an ROI property transaction (a seller and buyer and/or a landlord and tenant) to register on an online stamp duty payment system maintained by the Revenue Commissioners (ROI equivalent to HMRC) that enables the payment of stamp duty on completion of a transaction of ROI real estate. The following are some of the taxes affecting ROI residential property:
1. NON PRINCIPAL PRIVATE RESIDENCE (NPPR) CHARGE
NPPR is an annual charge that applied for the years 2009-2013 with regard to ROI residential property that was not the owner’s principal private residence (i.e. being a buy to let property or holiday home). This applies regardless as to whether a person is resident or not in ROI and includes persons born and ordinarily resident in Northern Ireland but nonetheless owning ROI Property. This tax amounted to a charge of €200 at each of the liability dates. If the entirety of these monies were not paid in the years 2009 to 2013 (inclusive), the overall tax payable, (including late fees and penalties) stands at €7,230 as at 31 August 2014. NPPR Charge was levied (subject to a number of exemptions) if:
• A property owner owned more than one home;
• A property owner only had one home and this home was not their principal private residence;
• Such a property owner lived ‘abroad’ (includes NI, England, Wales or Scotland) and at the same time owned ROI located residential property.
2. HOUSEHOLD CHARGE
In 2012, a new and separate tax to NPPR charge called “Household Charge” was introduced in ROI whereby a charge of €100 was applied to all residential property in ROI to help in the financing of services. This was a tax payable on ROI located residential property on 1 January 2012 by a registered owner even if they lived abroad (including persons born and ordinarily resident in Northern Ireland – be they Irish passport holders or UK passport holders). As and from 1 July 2013, any Household Charge amount not paid, has been increased to €200.
3. LOCAL PROPERTY TAX (LPT)
In 2013, a further annual tax called Local Property Tax (LPT) was introduced and charged on all residential property located in ROI (subject to certain exemptions). Registered owners of ROI residential property are liable to pay and the tax is based on a self assessment of the market value of the property on certain liability dates. The first liability date was 1 May 2013 and from 2014 onwards the liability date is always 1 November in the preceding year so, for example, 1 November 2017 is the liability date for the year 2018 as calculated by reference to certain value bands that are applicable to 2019 when they will be revised (most likely upwards). LPT is based on the market value of the applicable ROI residential property on the open market on the liability date(s).
To access a record of your LPT payments, you can log on to the Revenue Commissioners website and proceed to the LPT website.
TRANSACTING ROI PROPERTY
NPPR Charge, Local Property Tax and the Household Charge are all taxes payable on residential property amounting to unpaid charges that must be settled prior to any sale of residential property by providing either a Certificate of Exemption and/or a Certificate of Discharge to a purchaser as evidence of payment or exemption of NPPR charge and receipts for payment of LPT and Household Charge before the residential property can be sold/charged.
It is possible for a non resident owner to pay NPPR Charge without a PPS number. However to register for LPT and the Household Charge and obtain receipts of payment, an individual owner of residential property must be in possession of an activated PPS number and if a company it must be in possession of an ROI company tax number. A PPS number can be allocated to a non-resident individual to allow that individual make a return for LPT but such a number can only be used for payment of LPT. A PPS number received from the Department of Social Protection will need to be activated for stamp duty purposes by contacting the National Stamp Duty Office of the Revenue Commissioners to allow the PPS number to be used in paying stamp duty on the sale / purchase (or lease) of ROI located Property.
As mentioned, it is possible for a UK resident to own ROI residential property (i.e. a holiday home or a buy to let investment property) prior to 2009 without ever having obtained a PPS number and it is usually deemed necessary by acting solicitors to have working PPS numbers of parties to a transaction prior to entering into any contract for sale. An Irish citizen born in Northern Ireland or a UK Citizen in applying to the Department of Social Protection in ROI needs to complete an application form for a PPS Number and prove their identity by exhibiting either a certified copy of a current passport or a birth certificate or current driving licence, and provide evidence of an address in Ireland including an up to date (in the last 6 months) utility bill, financial statement, official letter and/or official document.
There is no exact timeframe for the issuing of PPS numbers by the Department of Social Protection. It is dependent on demand and if the application is delayed, this can cause difficulty if a Contract for Sale has been signed and exchanged between the parties and a closing date included without regard as to whether the vendor and/or purchaser are in possession of working PPS numbers (as can happen) and the transaction cannot complete until the vendor’s PPS number has been obtained (with the purchaser’s solicitor taking a view as to the obtaining of a PPS number by their client). It is essential for any individual owner of a residential property located in ROI, not holding a PPS number applicable for paying stamp duty, to apply for one at the earliest opportunity and “activate it” by confirming its details with the Irish Revenue Commissioners prior to entering into a binding contract for sale and MKB Law can assist.