“Non Principal Private Residence Charge” – Donegal Democrat 8 October 2009

Question from Mary in Donegal Town: I’ve recently read in the local media that there is some kind of tax to be paid on private houses. I’m confused by this – how much is this tax, and will I have to pay it on my own home?

1. What is the Non Principal Private Residence (NPPR) charge?

The Local Government (Charges) Act 2009 introduced an annual €200 charge on non principal private residences, payable by the owner of the NPPR to the Local Authority in whose area the property concerned is located. This charge was announced by Minister Lenihan in Budget 2009.

2. What types of properties are liable for the NPPR charge?

Subject to certain exclusions (see below) the NPPR charge applies to every residential property owned by a person which is not the principal or main residence of the owner.

This includes any house, maisonette, flat, apartment or bedsit.

3. What types of properties are exempted from the NPPR charge?

The Local Government (Charges) Act 2009 applies the charge to the owners of all residential property but goes on to exclude certain property or buildings from the definition of “residential property” and it also provides certain exemptions from the concept of ownership.

The main exemption from the charge is for a property which is the sole or main residence of the person who owns it, commonly referred to as a principal private residence (PPR).

While the exemption for a PPR covers one property only, a further limited exemption may apply where a person is moving house and temporarily owns two properties. This exemption covers a second residential property acquired within one year of the liability date where the first property is sold no less than six months after the liability date. For an explanation of “liability date”, see heading entitled “When is the charge payable?” (Point 6).

Additional exemptions include:

• A mobile home, caravan or vehicle.
• A newly constructed residential building that is unsold and has not yet been used as a dwelling, provided it forms part of the trading stock of a business.
• A residential property owned by an approved charity.
• A residential property occupied under a shared ownership arrangement with a housing authority or a building let by a housing authority, voluntary housing body or the HSE.
• A residential property held in a discretionary trust.
• A residential property occupied rent free by a relative of the owner of the property provided the said residential property is located no more than 2 km from the PPR of the owner. This would include a Granny flat and other similar residences.
• A residential premises owned by a person who lives elsewhere by reason of physical or mental incapacity.
• A building liable to commercial rates.
• Where a decree of divorce or judicial separation has been granted and a spouse owns the PPR of the other spouse, then he/she will not be liable to the charge in respect of that property.

4. How much is the charge?

The charge is currently set at an annual rate of €200 in 2009 per chargeable residence. The Act provides that the Minister may increase this charge from time to time, having regard to changes in the consumer price index.

It is important to note however that penalties apply for late payment of the charge (see below).

5. How do I pay the charge?

You can pay the charge electronically at the website www.nppr.ie.

To pay your NPPR charge online you will need your PPS number, the address of your NPPR property or properties and your debit card or credit card details.

Local Authorities (City or County Councils) will accept completed NPPR registration forms. The payment types accepted with a registration form are credit card, debit card, bank draft, postal order and cheque.

6. When is the charge payable?

Liability to pay the charge is determined on the basis of ownership of the property in question on a single day each year. This date is called the “liability date”. For 2009, the liability date is 31st July and an owner of a qualifying residential property must pay the charge by 30 September 2009. For the year 2010 and subsequent years the liability date has been set as 31 March and the NPPR charge must be paid by 31 May each year.

7. What late payment penalties apply?

The Act provides for a grace period of one month for late payment. Therefore, if a charge is not paid within a month after the last date for payment, a late payment fee will apply for every month or part of a month that the €200 charge remains unpaid. For 2009, this means that the late payment fee will apply to all payments made after 31 October 2009. For 2010 and subsequent years, the late payment fee will apply to all payments made after 30 June. The late payment fee for each property amounts to €20 per month or part of a month.

A person who does not pay the charge will be guilty of an offence and leaves themselves open to prosecution by the Local Authority to whom the payment is due.

8. Interesting Point – Selling the property

An unpaid charge and unpaid late payment penalties will be a charge on the residential property in question. This is likely to lead to difficulties in selling the residential property as the person buying it would become liable for any charges and fees outstanding in respect of the property concerned. In the event of a sale, the prospective purchaser will require a receipt or certificate from the local authority as proof that the charge has been paid.

9. What documentation and information must I provide?

The owner of a qualifying property must make a declaration to the relevant local authority that the property is liable to the charge. This declaration must be accompanied with payment of the charge. The declaration can be made through the web-site or in writing on the approved form (which may be downloaded from www.nppr.ie).

In summary, you must provide the following information:

• Name of the owner of the property.
• Address of the property.
• Address for correspondence of the owner of the property.
• Personal Public Service Number of the owner of the property in the case of a private ownership.
• Tax reference of the owner where the owner is a company.

10. Is the NPPR Charge tax deductible against my rental income?

A person in receipt of rental income is assessed to income tax on the net amount of the rents received, i.e. the gross rents less allowable expenses incurred in earning those rents. Only those expenses that are specified in the Tax Acts are allowable. The main deductible expenses are:

• Any rent payable by the landlord in the case of a sub-lease.
• The cost to the landlord of any goods provided or services rendered to a tenant.
• The cost of maintenance, repairs, insurance and management of the property.
• Interest on borrowed money used to purchase, improve or repair the property.
• Payment of local authority rates.

Revenue and the Department of Finance have indicated that the payment of the NPPR charge for residential properties is not an allowable expense in computing taxable rental income as it is not included on the list of allowable items.

13. WHAT WOULD YOU LIKE NIALL TO DISCUSS IN HIS NEXT ARTICLE?

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The views expressed in this article are the views of the author and do not necessarily reflect the views or policies of Niall Doherty & Co. Tax Consultants Limited, or its Board of Directors. Niall Doherty & Co. Tax Consultants Limited makes no representation concerning and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented herein. This article does not represent advice and no action should be taken on foot of any commentary made herein. Always consult a Registered Tax Consultant before implementing tax planning or tax structuring of any nature.

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