Analysis of recent property price developments and implications for Local Property Tax liabilities and revenue yield

Abstract

The introduction of the Local Property Tax (LPT) in 2013 marked a significant reform to tax policy in Ireland. Initial liabilities for LPT were determined by self-assessment into bands of property values as of May 2013, and the first revaluation was initially scheduled for November 2016. Reflecting the significant residential property price growth which has occurred since the initial valuation date, this paper estimates the implications for LPT liabilities of a hypothetical revaluation at May 2015 property prices. Drawing on a range of data sources, the authors use a transition matrix approach to illustrate the likely changes in LPT valuation bands and liabilities for residential properties. Revaluation is estimated to significantly increase tax liabilities for some taxpayers, with properties in higher valuation bands in May 2013 incurring larger increases in liability. The analysis also indicates substantial regional variation in band changes, with the largest band movements mainly occurring in Dublin.

Keywords

• local property tax
• property price changes
• residential property
• tax liabilities
• thornhill review