The key real estate measures introduced in Finance Bill 2025 include the following:
A reduction of the VAT rate from 13.5% to 9% on the sale of completed apartments.
The introduction of an enhanced corporation tax deduction in respect of certain construction costs on apartments.
A new exemption from corporation tax in respect of rental income arising from properties in the Cost Rental Scheme.
An extension of the Residential Development Refund Scheme to 31 December 2030. This scheme provides for a refund of 11/15 of the stamp duty paid on a conveyance of land that is subsequently developed as residential property.
A number of amendments have been made to the Residential Zoned Land Tax, including additional exemptions and deferrals.
The rental tax credit available for a principal private residence will be extended for a further three years to 31 December 2028.
The one-year mortgage interest tax relief for homeowners has been extended for another two years, such that interest tax relief is available in respect of the increase in mortgage interest paid in 2025 and 2026 (with tapering) versus interest paid in 2022.
The income tax deduction available for landlords carrying out retrofitting activities on their properties has been extended for a further three years to 31 December 2028.
The Living City Initiative, which provides tax relief for expenditure incurred on refurbishing or converting residential or commercial properties in designated “special regeneration areas”, will be subject to several amendments, including an increase in the scope of the scheme and an extension of its duration to 31 December 2030.
VAT on the sale of new apartments
There is a reduction in the VAT rate, from 13.5% to 9%, on the sale of completed apartments. This change took effect from 8 October 2025 (including apartments already under development). Apartments that qualify for VAT exemption remain exempt.
While this amendment is welcome, the measure does not reduce the 13.5% rate of VAT applicable to construction services. As a result, certain segments of the market — in particular, apartments delivered under a forward-funding structure, which consists of a site sale plus building agreement — will not benefit from the rate reduction.
Enhanced corporation tax deduction
In another measure intended to boost the supply of apartments, an enhanced corporation tax deduction will be introduced in respect of certain construction costs incurred on both the new development of apartments and conversion of existing properties (e.g. conversion of non-residential property, such as retail property, to apartments).
The enhanced deduction will be available for projects comprising of 10 or more apartments, provided certain requirements in respect of both the apartment block and the individual apartment are met. This enhanced deduction will be available for projects where a commencement notice is submitted between 8 October 2025 and 31 December 2030 (inclusive).
The measure will allow an additional deduction of 25% on certain “hard” costs incurred (i.e. a total deduction of 125% of the cost) up to a maximum enhanced deduction of €50,000 per apartment unit. However, on the basis of the current drafting and similar to the VAT reduction described above, apartments developed under a forward-funding model do not appear to be eligible.
Cost Rental Scheme: Exemption from corporation tax
There will be a new exemption from corporation tax in respect of rental income arising from properties in the Cost Rental Scheme.
This exemption will apply to all developments that are first designated by the Minister as falling within the scheme on or after 8 October 2025.
Stamp Duty
The Residential Development Refund Scheme, which provides for a refund of 11/15 of the stamp duty paid on a purchase of land that is subsequently developed as residential property, is to be extended to 31 December 2030. For multi-phase developments, it will be possible to claim the entire refund once the first phase commences. In addition, the current 30-month time limits that apply to the scheme (time from purchase to commencement of development, and time from commencement to completion) are to be extended to 36 months for “large-scale residential developments”, as defined in the Planning Acts.
Residential Zoned Land Tax
The Residential Zoned Land Tax (RZLT) was introduced in Finance Act 2021 and applies 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 applies based on the market value of the land at the valuation date.
In 2026, landowners will have the opportunity to have their land rezoned to avail of an exemption from RZLT if they seek to have their land rezoned to reflect genuine economic activity being carried out.
An exemption is also being provided from RZLT during An Coimisiún Pleanála proceedings brought by a third-party in relation to a grant of planning permission in respect of a relevant site. This had previously taken the form of a deferral.
Relief for renters
The annual tax credit available on principal private residences will be extended for a further three years to 31 December 2028. The value of the credit will remain at a maximum of €1,000 per single individual and €2,000 for married couples.
Mortgage interest relief
The mortgage interest tax relief for homeowners has been extended for another two years, such that interest tax relief is available in respect of the increase in mortgage interest paid in 2025 and 2026 (with tapering) versus interest paid in 2022.
This relief is available to LPT-compliant homeowners who have an outstanding mortgage of €80,000 to €500,000. Relief will be available at the standard rate of income tax, with the maximum relief capped at €1,250 per property for 2025 and €625 per property for 2026.
Certain anti-avoidance provisions apply for acquisitions of residential property from connected parties.
Retrofitting
The income tax deduction available for landlords carrying out retrofitting activities on their properties has been extended for a further three years to 31 December 2028.
The relief will also now be allowed to be claimed in respect of the year in which the expenditure occurred and the number of properties for which landlords can claim the relief in respect of is being increased from two to three. The relief available is the lower of €10,000 or the amount incurred on the retrofitting works.
Living City Initiative
The Living City Initiative, which provides tax relief for expenditure incurred on refurbishing or converting residential or commercial properties in designated “special regeneration areas” (i.e. in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford), will be subject to several amendments including an extension of its duration to 31 December 2030 and an increase in the scope for residential properties from those built before 1915 to those built before 1975.
The scheme will also be amended to support the use of “over the shop” premises for residential purposes and where the works are carried out by enterprises. The maximum amount of relief available will be increased from €200,000 to €300,000. The designated “special regeneration areas” will also be expanded to include Athlone, Drogheda, Dundalk, Letterkenny and Sligo. The relief on qualifying expenditure incurred on or after 1 January 2026 can now be claimed over two years at a rate of 50% per annum. The period over which unused relief may be carried forward is extended from seven years to ten years.
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’re here to help you
The PwC real estate tax team has significant experience in all aspects of the market, working closely with both property developers and investors alike, and would be happy to discuss any of the amendments discussed above.
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