OWNERS of investment properties and second homes have been warned that they need to pay the new property tax on second homes by the end of next month or they will face heavy fines.

The new €200 tax comes into effect next month, but many owners of second homes and investment properties are not aware of the fact that the payment deadline is fast approaching. The annual tax is payable to the local authority where the property is located.

Many owners may not know that if they do not pay it then there is a monthly 10pc surcharge imposed for failing to pay. Failure to pay the charge on non-principal private residences will incur hefty fines of €20 per month — but the amount is rolled-up, meaning that the bills soar over time.

For example, a person who fails to pay the tax for one year will owe €200 for the levy, plus €240 in fines, giving a total of €440.

Taxes and fines left unpaid will accumulate annually.

The late payment fee will apply to all payments made after October 31 next.

Failure to comply with the new law could result in a fine of up to €2,000.

Fees

Outstanding charges and unpaid late payment fees will remain as a charge against the property for up to 12 years, even if the property is sold.

Local authorities have been given extensive powers to examine the likes of electricity bills to make sure owners of holiday homes pay the second home tax.

Councils will be be able to check utility bills to see if power is turned off during the winter months — suggesting that the homes are only used as summer residences.

And they will also be examining the voter register and land registry records to see how many people owe the tax.

Announced last October, the new tax is expected to give local authorities up to €40m per year in additional funding. If you are a property owner, we recommend that you review your property portfolio immediately.

Remember that the payment deadline for 2009 is September 30, 2009.

Owners of investment properties and second homes can pay the charge electronically at the website, www.nppr.ie.