All households will be asked to pay “a small amount more” in Local Property Tax (LPT) to maintain and improve services provided by local authorities, Minister for Finance Paschal Donohoe has said.
Mr Donohoe was speaking after the Cabinet approved the publication of draft legislation to change the way LPT is calculated in advance of the revaluation of properties due to take place in November.
Without the planned changes to the LPT regime householders would see significant increases in the rate they pay given the increase in property prices nationally since the last revaluation in 2021.
Householders self-assess market values and the new rates of LPT will kick in from 2026.
Mr Donohoe said under the proposed legislation the valuation bands will be widened in line with the property price growth seen in recent years and the base rate of LPT will also be amended.
He said the changes are needed “to ensure that what we are asking people to pay can be more affordable”.
Mr Donohoe said most property owners will remain in the same valuation band and the majority will pay €5-€25 extra per year.
He said such increases would apply for properties with a value of up to €525,000.
There will be increases of up to €48 per year for people with properties valued up to €1.05 million who stay in the same valuation band.
Mr Donohoe said there will be “larger increases for more valuable properties”.
He said: “By asking property owners to contribute more than they do at present, the local property tax ... will yield in the realm of €45 million more or 8 per cent in additional funding for local authorities.”
“This will go towards local services and amenities,” he said.
The Government is also planning to change the Local Adjustment Factor (LAF) which allows councils to adjust the LPT collected in their areas upwards from the current 15 per cent allowed to a maximum of 25 per cent from next year onwards.
The ability of councils to adjust the LPT rate downwards will remain capped at 15 per cent.
Mr Donohoe said: “To support those who may need assistance, Government has also agreed to increase the income thresholds for the purposes of Local Property Tax deferral.”
The income threshold for a full LPT deferral for a single person will be increased from €18,000 to €25,000.
For a couple, it will be increased from €30,000 to €40,000.
The Bill also proposes to set the duration of the upcoming valuation period to five years, commencing in 2026 and ending in 2030, with future valuation periods also lasting five years.
The Department of Finance offered some examples for how the changes would affect different households.
A house in Longford valued at €115,000 in 2021 would now have an estimated value of €149,000. It would remain in LPT band 1 and the owner’s liability would increase from €90 to €95.
A house in Kildare valued at €450,000 four years ago would have a current estimated value of €533,000 and the liability for the homeowner would be up €28 to €523.
A high value house in Dún Laoghaire-Rathdown valued at €3.55 million in 2021 would be worth an estimated €4.045 million now.
The owner’s LPT liability would increase by €1,902 from €8,230 to €10,123 under the planned changes.
