The key real estate measures introduced in the Finance Bill are as follows:
The Help to Buy Scheme has been extended in its current form by one year to 31 December 2025.
The rate of the Vacant Homes Tax has been increased from three times the basic local property tax (LPT) rate to five times that rate.
The date for mapping in respect of assessing the Residential Zoned Land Tax liability will be extended by an additional year to ensure that stakeholders have sufficient opportunity to engage in the mapping process.
The Defective Concrete Block Levy is being amended so that it will no longer apply to ready-to-pour concrete used in the manufacture of precast concrete products.
The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) is being extended for a further two years to 31 December 2025.
The rental tax credit available for a principal private residence will be increased from €500 to €750.
A one-year mortgage interest tax relief will be introduced for certain homeowners whose mortgage interest payments on their principal private residence increased from 2022 to 2023.
Relief at the standard rate of income tax will be available for residential rental income earned by individual landlords on properties that are kept in the rental market from 2023 to 2027.
Technical amendments have been made to the legislation governing the payment of rent to non-resident landlords.
Technical amendments to capital gains tax relief on properties purchased between 2011 and 2014.
Our analysis
Help to Buy Scheme
The enhanced Help to Buy scheme, first introduced in July 2020, has been extended in its current form and will now expire on 31 December 2025.
The scheme provides relief to first-time buyers in the form of a rebate of income tax, including DIRT, paid over the previous four tax years. The maximum rebate available is the lower of:
- €30,000; or
- the amount of income tax and DIRT paid in the previous four years; or
- 10% of the purchase price or valuation of a self-build.
Relief is capped at €30,000, a maximum house price of €500,000 and a minimum loan-to-value of 70%. With effect from 11 October 2023, applicants for the Local Authority Affordable Purchase (LAAP) scheme will also be eligible to apply for the Help to Buy scheme.
Residential Zoned Land Tax
The Residential Zoned Land Tax (RZLT) was introduced in Finance Act 2021 and will apply to owners of serviced and undeveloped land that has been zoned for residential use. For land that is within the scope of the regime, an annual 3% tax will apply based on the market value of the land at the valuation date.
The Bill has extended the date for mapping by one year in respect of assessing the Residential Zoned Land Tax liability. The extension is to ensure that stakeholders have sufficient opportunity to engage in the mapping process.
Residential land subject to phased development under a local authority development plan or local area plan has been excluded from the application of the tax also.
Vacant Homes Tax
The rate of the Vacant Homes Tax (VHT) has been increased from three times the basic local property tax rate to five times that rate. No account is taken of the local adjustment factor, as decided by local authorities, in calculating the liability to VHT.
The VHT applies to residential properties occupied as a dwelling for less than 30 days in a chargeable (12 month) period. Each chargeable period commences on 1 November and ends on 31 October of the following year. This increased rate of VHT will take effect from the next chargeable period for VHT commencing on 1 November 2023.
Defective Concrete Products Levy
The Defective Concrete Block Levy has been amended so that it will no longer apply to ready-to-pour concrete used to manufacture precast concrete products.
The Bill has also introduced a refund scheme to allow those who paid the levy on such concrete between 1 September 2023 and 31 December 2023 to reclaim it.
The levy applies to a defined list of certain concrete products that are used for any purpose (i.e. residential or commercial development) and is calculated at 5% of the open market value of the concrete products.
Before making the first supply of a concrete product, chargeable persons are required to register with Revenue and will be required to file a return within 23 days from the end of an accounting period (for example, the return for the six months ended 30 June 2024 would be due on 23 July 2024).
Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE)
The extension of the ACA scheme for EEE for a further two years to 31 December 2025 reiterates the Government’s commitment to climate action.
Relief for renters
The annual tax credit available on principal private residences will be increased from €500 to €750 for individuals, and €1,500 for married couples. In addition, parents who pay for their student children’s rent-a-room or ‘digs’ accommodation will be able to claim a rental tax credit in respect of such lettings. The option to claim this tax credit will also be backdated for FY2022 and FY2021.
Mortgage Interest Relief
A one-year mortgage interest tax relief has been introduced for homeowners whose mortgage interest payments on their principal private residence increased from 2022 to 2023.
This relief will be available to LPT-compliant homeowners who have an outstanding mortgage of between €80,000 and €500,000. Relief will be available at the standard rate of income tax on the amount by which interest paid in 2023 exceeded interest paid in 2022, with the maximum relief capped at €1,250 per individual. Individuals must file tax returns to claim the tax credit.
Certain anti-avoidance provisions apply for acquisitions of residential property from connected parties.
Rental Income Relief
Relief at the standard rate of income tax will be available in respect of residential rental income earned by individual landlords on properties kept in the rental market from 2024 to 2027. This relief only applies to tax compliant and Residential Tenancies Board (RTB) registered landlords, and does not apply to corporate landlords.
A tax credit equal to 20% of rental income (after allowing for loss relief) will be available, subject to the following maximum levels: €600 in 2024, €800 in 2025, and €1,000 in each of 2026 and 2027. Where a property is removed from the rental market during the four-year period, a full clawback of the relief claimed will arise.
Stamp Duty
The Bill provides for an increase in the stamp duty exemption that applies on certain short-term leases of residential property. This amendment will increase the annual rent threshold from €40,000 to €50,000.
Non-resident landlords
Technical amendments have been included to clarify that tenants making rental payments to non-resident landlords via a collection agent should not be obliged to operate withholding tax on such payments.
Retrofitting Scheme
The scheme, which allows for a deduction for certain retrofitting expenditure, has been expanded to include properties previously subject to certain rent controls.
Relief for certain disposals
The legislation which provides for relief from capital gains tax on the disposal of properties acquired between 2011 and 2014 has been amended to clarify that such properties must have been purchased for their market value without regard to any provisions that deem a transaction to have occurred at market value between connected parties.
Key actions businesses can take today
1. Take action now
The Irish tax system is complex and ever-changing. The Finance Bill brings new and improved incentives to maximise tax savings for your business. Please reach out to your PwC contact to find out how we can help.
2. Consider the impact on your business
The proposed legislative changes will likely have an impact on your organisation. PwC’s tax team is available to help you and your business understand how these changes will impact your business.
We are here to help you
The Finance Bill has introduced a number of legislative changes which will impact the broader real estate sector. PwC’s team of real estate tax experts are available to help you understand how such changes could impact your business. Please get in touch with us for further insights.
