Budget 2024 made some changes to existing property-related taxes and reliefs and introduced a new temporary measure.
Help To Buy (HTB)
The Help to Buy Scheme is being extended for a further year until 31 December 2025. The scheme is also being amended to reflect its interaction with the Local Authority Affordable Purchase Scheme (LAAP). This amendment will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70% loan-to-value requirement, thereby facilitating access to all LAAP purchasers to the HTB scheme. This will come into effect from 11 October 2023.
Rented Residential Relief
A new temporary tax relief for landlords is being introduced. Subject to certain conditions being met, rental income of €3,000 for the year 2024, €4,000 for 2025 and €5,000 for the years 2026 and 2027, will be disregarded at the standard rate.
A full claw-back of the benefit of the relief applies in the event the landlord removes from the rental market, within 4 years, any of the rental properties held in year 1 when the benefit is claimed. There is no clawback after the expiry of the 4-year period.
The relief relates only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled. Further detail will be set out in the Finance Bill.
Vacant Homes Tax (VHT)
The VHT was introduced in 2023 to increase the supply of homes for rent or purchase to meet demand for housing. The tax applies to residential properties which are unoccupied for twelve months or more. A property will be considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12-month period.
The rate of the VHT is being increased from three times to five times a property’s existing base Local Property Tax liability. This increase will take effect from the next chargeable period, commencing 1 November 2023.
Residential Zoned Land Tax
Budget 2022 announced a new Residential Zoned Land Tax to encourage the use of land for building homes. The Minister announced that the primary objective is to increase the supply of residential accommodation rather than to raise revenue.
The tax is based on the market value of the land and will be applied at a 3% rate from the outset. Landowners will have an opportunity to apply to their Land Authority to have the zoning status of their land amended. Once the tax is introduced it will replace the vacant site levy.
The liability date for the Residential Zoned Land Tax (RZLT) is being extended by one year to allow for the planned 2024 review of maps to take place and to afford affected landowners with a further opportunity to engage with the process.
For further information contact Robert Lohan at rlohan@dhkn.ie.
This newsletter is intended as a general guide to the subject matter and should not be used as a basis for decisions. Whilst every effort has been made to ensure the accuracy of the content, no liability can be taken for any omissions or errors. Professional taxation advice should always be taken prior to proceeding with any transaction giving rise to tax consequences.
