The new Local Property Tax is to start on 1 July 2013, for the second half of the year.

The rate of the tax will be 0.18% of market value up to €1m, and 0.25% on values above that level.

Finance Minister Michael Noonan said the rates will not be varied during the lifetime of the Government.

Explaining how the tax will work, he said that properties with a value of over €100,000 and less than €1m will be assessed at the mid-point of bands of €50,000.

For example, any properties valued between €150,001 and €200,000 will be assessed at 0.18% of €175,000.

Properties below €100,000 will be assessed at 0.18% of €50,000.

Properties valued at over €1m will be liable at 0.18% on the first €1m and 0.25% on the balance, with no banding applied.

The minister said that property owners will be able to choose from a wide range of payment options.

These will include payment by direct debit, cash payments, credit or debit cards, or deduction at source from salary or certain State payments.

There will be options to pay the charge in instalments.

Certain properties will be exempt from assessment and these will mainly correspond to exemptions from the household charge.

Mr Noonan said that from 1 January 2015, local authorities will have the power to vary the rates by 15% above or below the central national rates to better match their funding needs.

He said the household charge will cease with effect from January 2013 and the non-principal primary resident charge (second home charge) will case with effect from January 2014.

The new tax will collected by the Revenue Commissioners and owners of residential properties, including rental properties, will be responsible for payment of the tax.

The tax will be payable on the basis of the market value of the property as assessed by its owner.

Revenue will provide valuation guidance to which owners can refer, and the initial valuation is valid up to and including 2016.

Revenue is compiling a comprehensive register of residential properties in the State. It is expected to contain approximately 1.9m properties.

In March Revenue Commissioners will send information to people liable for the tax explaining their obligations.

If a taxpayer does not choose a method of payment, the tax will be deducted at source.

This could apply to salaries or occupational pensions, social welfare payments or scheme payments from the Department of Agriculture, Food and the Marine.

For self-employed people, tax-clearance certificates will not be issued if the LPT has not been paid, and late payment could expose the taxpayer to an income tax surcharge. 

When the tax has not been paid for a property, a charge will be attached to the property, which will have to be discharged before the property can be transferred or sold.

Voluntary deferral system

In certain cases there will be an option to defer the payment of the tax.

Single people with a gross income lower than €15,000 or couples with a joint income lower than €25,000 can apply to defer.

Owner occupiers with outstanding mortgages will also be able to apply if their income falls below €15,000/€25,000 after 80% of mortgage interest is deducted.

Interest will be charged on deferred payments, but at a lower rate than in cases of non-payment.