Paschal Donohoe (Dublin Central, Fine Gael)
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I am advised by the Revenue Commissioners that, in general, where a person surrenders their property to a financial institution and where a person such as a receiver appointed by a financial institution disposes of a property on behalf of that financial institution, the debtor i.e. the property owner, is the person disposing of the property but the person acting on behalf of the financial institution is accountable for any CGT that may be due. That tax must be paid by such accountable person out of the proceeds of the disposal in priority to any debt such as a mortgage secured on the property.

The amount of CGT chargeable is determined by reference to the circumstances of the debtor. Accordingly, if the property disposed of was occupied by the debtor as that debtor’s principal private residence for all or part of the debtor’s period of ownership, full or partial relief from CGT may apply to the extent that any CGT liability arises. The last 12 months of ownership of the property by the debtor is treated as a period of occupation for this purpose.

With respect to local property tax (LPT), under the Finance (Local Property Tax) Act 2012 (as amended), the person who is the liable person on the liability date for a particular year is the person who is responsible for the payment of LPT for that year. Thus, for example, the person who is the liable person on 1 November 2019 is responsible for the payment of LPT for the year 2020.

In general, the owner of a residential property is the liable person. However, where a financial institution enforces its security over a property by taking possession of the property, the financial institution, as a ‘mortgagee in possession’, displaces the owner of the property as the liable person. If the financial institution does not actually become a ‘mortgagee in possession’, the owner of the property continues to be the liable person. However, depending on the particular circumstances, it may happen that a financial institution that does not become a ‘mortgagee in possession’ agrees to pay the LPT.