LPT update
The Conveyancing Committee has had a number of meetings with Revenue on various aspects of LPT that affect conveyancing practitioners, and confirms as follows:
LPT clearance in ‘second and subsequent sales’ scenario
Following representations from the committee, Revenue has reworded its on this topic, which clarifies the matter for practitioners.
Revenue has confirmed that, in cases where specific clearance has been applied for and granted, the valuation band originally declared will be the relevant band until the next valuation date. For example, a property (outside Dublin) with a declared valuation of €300,000 (Band 5) sells for the first time in 2019 for €480,000. This sales figure is outside general clearance, so specific clearance is applied for and granted. Revenue has confirmed that the relevant band remains Band 5 for any subsequent sales in the valuation period.
The committee requested that Revenue put something on the LPT property history screen to show if specific clearance had been granted in a previous sale in a valuation period. The ‘specific clearance’ indicator has now been made available by Revenue and is included in the LPT history details screen. The date the specific clearance that was granted is also included.
Revenue has also confirmed that, where there is more than one sale in a valuation period and general clearance applied on the first sale, this is sufficient to confirm the declared valuation for any and all subsequent sales within the valuation period. For example, a property with a declared valuation of €300,000 is sold in 2014 for €350,000; general clearance would have applied at the time. The property is sold in 2019 for €480,000; specific clearance is not what is required, as the general clearance for the first sale confirmed the declared valuation.
In such circumstances, the following would apply: if the vendor does not have specific clearance for a previous sale (in the example above, general clearance would have applied to the 2014 sale) and general clearance does not on the face of the current sale apply, an application should be made to Revenue for specific clearance. In these circumstances, Revenue will issue a confirmation that the conditions for general clearance are satisfied and that, accordingly, the relevant band remains the valuation band originally declared. This will confirm that all LPT and Household Charge liabilities have been paid and returns filed and that the property valuation (as at 1 May 2013) was reasonable. This LPT clearance should be retained with the title documents, as it should be produced on any subsequent sales within the valuation period.
In circumstances where the current sale meets the general clearance criteria, the standard general clearance process should be applied.
A copy of the LPT clearance documentation (including confirmation that the 2013 valuation satisfied Revenue guidelines) for the first sale in the valuation period is sufficient to confirm the declared valuation for any and all subsequent sales within the valuation period. In addition, a current property history summary will confirm that all LPT and Household Charge liabilities arising to date have been paid in full.
Guidelines on Household Charge in LPT system
The committee had asked Revenue to review the problem that arises where there was on the face of the LPT property history screen no Household Charge due at the time a purchaser closed the sale of a property, but Revenue later finds out that a previous owner had misdeclared or not declared for Household Charge and the arrears due by the previous owner are then placed on the property history screen as arrears. This prevents the current owner from selling the property without addressing the previous owner’s liability, as unpaid Household Charge is a charge on the property.
The Law Society’s view is that the current owner should not be adversely affected by such an event if the LPT property history screen was clear at the time they purchased.
Revenue has acknowledged that, where the Household Charge liability comes to light after the date of sale, and the sum due was the liability of a previous owner, Revenue would not expect the current owner to be liable for same. They suggested that, in cases where sums due were the liability of a previous owner but have been put on the property history screen as arrears following a Revenue audit etc, Revenue can put an indicator on the property history screen saying that this sum is not a charge on the property. The committee agrees that, as a matter of practice, this would be sufficient evidence for title purposes that there is no claim by Revenue against the property and that Revenue will pursue the matter with the previous owner as a debt due. Revenue is to put a process in place to reflect that there is no charge on the property, even though the property history screen says there are arrears, and an IT development is needed for this. Until the process and IT has been put in place, Revenue has confirmed that solicitors for vendors in this situation should contact them as early as possible in a transaction at lpt@revenue.ie to have the matter resolved by provision of a letter confirming that Revenue has no charge on the property.