This Property Tax has been the bain of life for many property owners with second Residential properties, where they have face charges of up to €7,400 for their failure to pay the Non-Principal Private Residences (NPPR) tax for the years 2009 to 2013. Indeed, a lot of owners (particularly investors from outside Ireland with investment property in Ireland) only found out about the tax when they came to sell the property. Often, they were forced by a Bank to sell the property and could ill-afford this tax bill!
The Local Government (Charges) Act 2009
The Local Government (Charges) Act 2009 affected and continues to affect the sale of certain ‘residential property’ (as defined in the 2009 act), being in essence non-principal private residences (NPPR) from 31 July 2009. Section 3 of the act imposed an obligation on ‘the owner’ of such a property on the liability dates of 31 July 2009 and 31 March in the years from 2010 to 2013 inclusive to pay a charge of €200 to the local authority in which the NPPR was located. Where the tax was not paid on the liability dates cumulative charges and penalties has brought the overall liability to a staggering €7,400.
Section 7(1) of the 2009 act states: “Any charge or late payment fee due and unpaid by an owner of residential property shall, subject to subsection (2), be and remain a charge on the property to which it relates.”
There is however a chink of light in the following sub-section:
Section 7(2) states: “The said property shall not, as against a bona fide purchaser for full consideration in money or money’s worth or a mortgagee, remain charged with or liable to the payment of such unpaid charge or late payment fee after the expiration of 12 years from the date upon which the amount concerned fell due.”
Deliberations by Law Society Conveyancing Committee
The Law Society Conveyancing Committee had received a large number of queries from the profession as to whether or not a purchaser and/or a solicitor for a purchaser who acquires such a property for full consideration in money or money’s worth after the expiry of 12 years from a given liability date as defined in section 3(1) of the 2009 act should be concerned with any liability for non-principal private residence charge falling due on such liability date. As stated above, the first liability date was 31 July 2009.
Opinion from leading Conveyancing Counsel
Given the significance of this issue for the profession, the Committee obtained an opinion on the matter from a leading conveyancing counsel. The advices received from counsel were that a bona fide purchaser acquiring property for full consideration in money or money’s worth following the expiry of 12 years from a given NPPR liability date does not need to be concerned with any liability for non-principal private residence charge due in respect of such liability date.
The Conveyancing Committee has stressed that, while it is not the obligation of the Committee to interpret the law, it does give guidance to the profession on a regular basis on what it believes to be prudent conveyancing practice and accordingly has advised that it is reasonable for a prudent solicitor to advise a purchaser acquiring property for full consideration in money or money’s worth to proceed with a purchase without raising any requisitions or objections in relation to any NPPR charge outstanding following the expiry of 12 years from its liability date. Otherwise, the 12-year limit referred to in section 7(2) of the 2009 act would be meaningless.
What does this mean?
Certainly, for a Sale which is due to conclude in July 2021, the completion of the Sale should be deferred until after the 31st July next (that is, 12 years from the 2009 liability date). Likewise, next year where the 2010 tax may not have been paid, the conclusion of the Sale should be deferred until after the 31st March 2022.
This means that by 31st March 2025 all of this NPPR tax will be Statute-Barred and Solicitors will have one less item of tax to collect for the Revenue Commissioners!
If only we could simply get on with the job of Conveyancing!
For further information on Property matters you should contact:
Morgan McManus Solicitors