The Household charge was a property tax on residential property introduced in 2012 by the Local Government (Household Charge) Act 2011. The Household Charge was a single payment of €100.00 to be paid on or before 1 January 2012. It was a matter for each property owner to register their property for the tax and discharge it within the specified period.
In 2013, the Local Property Tax (“LPT”) was introduced and replaced the Household Charge. Any outstanding Household Charge liability is now payable to Revenue and collected through their LPT system.
Why is the Household Charge still relevant?
The Household Charge is a charge on the property for a period of 12 years from the date it fell due.
Purchasers will insist that any arrears of the Household Charge be discharged on closing.
Confirmation of Payment
Evidence of payment of the Household Charge is evident on the Revenue LPT History printout.
Until recently, an up to date LPT History printout would be furnished to the purchaser on closing to confirm the payment had been made.
The Law Society now recommends that purchasers and lending institutions do not rely on this screenshot. This is following a recent Revenue audit that identified a series of accounts that did not declare their property for the tax when they ought to have. These accounts showed a nil balance in respect of the tax when they in fact should have shown that the tax remains outstanding.
A difficulty arises when a person is selling the property who was not the registered owner on the 1 January 2012 (the liability date for the charge) and who had purchased the property in good faith having relied on there being no outstanding arrears on the Property History Screen. That person will not be in a position to progress his sale without discharging the unpaid arrears of Household Charge which are the liability if another tax payer.
Current Conveyancing Committee Guidelines
- A current owner in the case outlined above should not be required to discharge another taxpayer’s liability where the Revenue screenshot showed no outstanding arrears of Household Charge at the time s/he purchased the property;
- It is the responsibility of Revenue to pursue the owner as of 1 January 2012 for any outstanding liability to Household Charge for 2012 and for any failure to declare the property for Household Charge at that time; and
- Revenue should provide all prospective purchasers with a letter confirming that there is no charge on the property in respect of the sum due by the owner as of 1 January 2012.
The Law Society have taken this matter up with Revenue and it remains to be see how this issue will be resolved.
The vendor who purchased the property in good faith that the Household Charge had been discharged and now find the arrears are actually owing remain in limbo until this matter is resolved. Such vendor appears to have no option but to discharge the tax if they wish to complete their sale.
Accordingly, going forward, vendors should seek this confirmation from Revenue when preparing for sale / mortgaging and Solicitors for purchasers and lending institutions should insist on receiving it.
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