The key real estate measures introduced in Finance Bill 2024 include:
A new 6% rate of stamp duty which will apply to certain acquisitions of residential property exceeding €1.5m.
The rate of stamp duty on the bulk purchase (10 in a 12 month period) of residential property other than apartments has increased from 10% to 15%.
The Help to Buy Scheme has been extended in its current form by four years to 31 December 2029.
A number of amendments have been made to the Residential Zoned Land Tax, including the introduction of certain exemptions and deferrals.
The rate of the Vacant Homes Tax has been increased from five times the basic local property tax (LPT) rate to seven times that rate.
The rental tax credit available for a principal private residence will be increased to €1,000 for single persons and €2,000 for joint assessed persons for the 2024 and 2025 tax years
The one year mortgage interest tax relief for homeowners has been extended for another year, such that interest tax relief is available in respect of the increase in mortgage interest paid in 2024 compared to 2022.
The relief available for landlords on pre-letting expenditure incurred on vacant residential premises has been extended for a further three years.
New 6% stamp duty rate on residential properties
The Bill introduces a new 6% rate of stamp duty for acquisitions of residential properties valued above €1.5m ex-VAT. The existing rate of 1% will still apply to the first €1m, and the 2% rate will apply to the next €500k, with the excess over €1.5m liable to 6% duty.
The new 6% rate is not intended to apply to purchases of 3 or more residential units in an “apartment block” (a multi-storey residential property comprising not less than 3 apartments with grouped or common access) in deals exceeding €1.5m in value, and it is intended that the 1% / 2% rates should still apply to such acquisitions.
However, the 6% rate is intended to apply to an acquisition of 2 apartments in a transaction exceeding €1.5m in value. As the Bill is currently drafted, the new rate would also appear to apply to acquisitions of 2 or more residential units other than apartments in a transaction exceeding €1.5m in value, provided those units are not “relevant residential units” (10 or more residential units other than apartments in apartment blocks acquired in a 12 month period) - as they should be separately liable to the 15% duty for bulk acquisitions (see below).
While it is clear what the intention of the proposed amendments contained in the Bill is, we would expect some small changes to the drafting as the Bill progresses through the Oireachtas.
The new rate applies to transfers executed on or after 2 October 2024, but transitional arrangements are in place for deals where binding agreements were entered into before 2 October 2024 and transfers (conveyances / leases) are executed before 1 January 2025, with appropriate certification included in the transfer instrument.
Increased rate of 15% on the bulk purchase of certain residential properties
The rate of stamp duty on relevant residential units (defined above) is set to increase from 10% to 15%.
This measure will also have effect for transfers executed on or after 2 October 2024, with transitional arrangements in place for deals where binding agreements were entered into before 2 October 2024 and transfers (conveyances / leases) are executed before 1 January 2025. Appropriate certification must be included in the transfer instrument.
As well as applying to direct acquisitions of residential property, this rate applies to acquisitions of shares/units/partnership interests deriving value from relevant residential units.
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 2029.
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%.
The definition of “qualifying residence” under the scheme has been amended to ensure that a newly constructed property purchased by a Local Authority for onward sale to an affordable purchaser under the Local Authority Affordable Purchase Scheme is eligible for the relief.
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 (1 February).
The Bill contains a number of positive amendments to the existing regime, including:
An ability to claim an exemption from the 2025 RZLT liability, in certain circumstances, where the owner of a site included on the revised map (to be published on 31 January 2025) has requested the rezoning of the site between 1 February 2025 and 1 April 2025;
An ability to claim an exemption from RZLT (rather than a deferral) where development of a site may not be commenced because the planning permission is subject to a third-party judicial review application, or an appeal of a judicial review determination (a “relevant petition”); and
A deferral of RZLT for 12 months from the grant of planning permission, or until the land is sold to a third party, if earlier.
a provision for the 12-month deferral (from the date planning permission is granted) of the RZLT to continue where a site is transferred between group companies.
The Bill also contains a number of technical amendments including provisions which allows for sections of a site which are subject to planning permission to be treated as separate sites for RZLT purposes.
Vacant Homes Tax
The rate of the Vacant Homes Tax (VHT) has been increased from five times the basic local property tax rate to seven 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 2024.
Relief for renters
The annual tax credit available on principal private residences will be increased from €750 to €1,000 for individuals, and €2,000 for married couples. The option to claim this increased tax credit will be available for the 2024 and 2025 tax years.
Mortgage Interest Relief
The one year mortgage interest tax relief for homeowners has been extended for another year, such that interest tax relief is available in respect of the increase in mortgage interest paid in 2024 compared to 2022.
This relief is available to LPT-compliant homeowners who have an outstanding mortgage of €80,000 - €500,000. Relief will be available at the standard rate of income tax, with the maximum relief capped at €1,250 per property.
Certain anti-avoidance provisions apply for acquisitions of residential property from connected parties.
Pre-Letting Expenditure
The relief available for landlords on pre-letting expenditure incurred on vacant residential premises has been extended for a further three years to apply to expenditure incurred on or before 31 December 2027 on vacant premises.
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.
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