Your personal finance questions – Do I need to declare my new home to Revenue for local property tax?

Q I bought and moved into my first home at the beginning of the year. This is a newly built property. My father told me that for Local Property Tax (LPT) purposes I need to declare property to the Inland Revenue this November. I assume the property is newly built and therefore not subject to LPT?

One Your father is right. According to Marian Ryan, Consumer Tax Manager at Taxback.com, your home is subject to local property taxes, so you have until November 7 to file your LPT return.

You do not have until November 7 to pay your LPT bill. You can wait until New Years to pay. You might be confused about the previous exemptions for new home buyers. Ms Ryan said new and previously unoccupied properties purchased from builders or developers between January 1, 2013 and October 31, 2021 are exempt from the LPT.

This exemption is no longer available. When filing an LPT return for your home, you need to determine the value of your property as if it were intact on November 1, 2021, even if it wasn’t fully built by then, she said.

The date you need to pay your LPT bill depends on how you plan to pay it. For example, if you plan to pay your bill in full by cash, check, or debit or credit card, January 10, 2023 is the date you must pay your bill.

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You can also spread your LPT bill until 2023, but you need to tell the tax office how you intend to do this by 2 December this year.

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Q During a storm, strong winds toppled the roof of my home, causing severe structural damage. When I went to claim it, my insurance company told me it would not pay the full cost of the repair. It says my home insurance is about 30% underinsured. As a result, I had to pay a bill of at least 15,000 euros myself. It must be wrong, right?

ofOne Many homeowners may only get a fraction of the payouts they expected from their insurers this fall and winter because they’ve unknowingly underinsured their homes. Peopl Insurance chief executive Paul Walsh said this was largely due to rising construction costs.

What seems to be happening in your case is that the building’s insurance amount is too low, which is the most your insurance company will pay if your home is damaged or destroyed and needs to be rebuilt.

The insurance company reduces its liability for damage to the home proportionally to the amount of underinsurance

Maybe you only insured your house for €280,000, but the real cost of rebuilding it is €400,000. If this is the case, your insurance company may reduce the coverage of any claim by 30%, regardless of the size of the claim.

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Mr Walsh said this was because home insurance policies often included an averaging clause, whereby insurers reduced their liability for home damage in proportion to the amount of underinsurance.

For insurance companies, all rebuild costs within a certain range are charged at the same rate. So you’ll find it costs little or no extra to add the rebuild value of your home to your home insurance policy, he says.

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Q I started saving for a house a few years ago, but I seem to have saved up to €1,000. I never borrow money for things like car insurance, car taxes, or vacations, but that means I end up dipping into my house savings to pay for them. How can I better build my home savings?

ofOne Stephen Rice of Aviva Life and Pensions says it’s best not to borrow money to pay for things like holidays and car taxes.

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He recommends a three-pronged approach to your savings, so that long-term goals (such as your pension or your children’s education) are protected in a life insurance savings plan, while saving for medium-term goals (such as a home) is deposited into a regular or Call out savings accounts, then use instant access accounts for short-term goals.

Avoid making checking accounts easy to access, advises Mr Rice.

Set realistic goals for savings you can afford

It will be easier for you to save for short-term goals if you keep this money in an account separate from the one you use to pay your daily bills. Set realistic goals for how much you can save by looking at your daily expenses and how much disposable income you have.

Once you’ve decided what level of savings you’re comfortable with, then decide how much you want or need to put in each of the three buckets.

Since your circumstances may change, it’s important to review your savings each year to make sure they’re aligned with your goals.

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