Housing - Budget 2026

The need for a whole-of-government approach to tackle the ongoing housing crisis is well accepted by now. The Institute has called for tax-based levers to address the ongoing market failure in delivering affordable housing at scale and at speed. Today’s Budget includes some important changes to key reliefs as well as new measures which, if properly implemented and legislated, should have a positive impact on the construction of buildings and utilisation of land in Ireland.

VAT on New Apartments

You can read a full update on the announcements under our VAT section here.

Residential Development Stamp Duty Refund Scheme

You can read a full update on the announcements under our Stamp Duty section here.

Deduction for retrofitting by landlords

The tax relief available to landlords for qualifying retrofitting expenditure on rented residential properties has been extended by a further three years, now applying until 31 December 2028.

In addition to the extension, two key enhancements have been introduced:

• Timing of relief: The deduction may now be claimed in respect of the year in which the expenditure is incurred, rather than being deferred.
• Scope of relief: The maximum number of properties for which a landlord may claim the relief has increased from two to three.

These changes aim to further incentivise energy efficient improvements in the private rental sector.

Corporation tax exemption for cost rental income

The new corporation tax exemption for cost rental income will apply to rental profits derived from residential properties designated as Cost Rental to accelerate the delivery of affordable housing. The exemption will apply from 8 October 2025.

Cost Rental is a tenure model established under Part 3 of the Affordable Housing Act 2021, aimed at supporting moderate-income households who fall outside the eligibility criteria for social housing. Strict eligibility criteria and operational rules apply to ensure transparency and alignment with the scheme’s objectives.

Enhanced corporation tax deduction for apartment construction costs

The enhanced corporation tax deduction allows developers to claim 125 percent of qualifying construction costs, subject to a cap of €50,000 in additional deductible costs per apartment unit. The measure is aimed at improving the financial viability of apartment development projects by bridging the gap between development costs and achievable market prices.

Key features of the measure include:

• Deduction rate: Qualifying construction costs will attract a deduction of 125 percent, capped at an additional €50,000 per unit, equating to a maximum tax benefit of €6,250 per apartment.
• Ownership requirement: The developer must be the beneficial owner of the property at the time of completion.
• Project size: Relief is available for developments comprising 10 or more apartments.
• Eligible projects: Applies to both new-build and conversion projects, including changes of use (e.g. office or retail to residential).
• Timing: Relief is available for projects where a Commencement Notice is submitted between 8 October 2025 and 31 December 2030.
• Claim point: The deduction becomes claimable upon completion, evidenced by the signing of the Certificate of Compliance.

Living City Initiative

A number of enhancements to the Living City Initiative were announced today. The initiative supports the regeneration of older housing and commercial stock in designated Special Regeneration Areas. The key changes announced include:

• Extension of the initiative to 31 December 2030.
• Expansion of eligibility: The qualifying building age for owner-occupier and rented residential relief is increased from pre-1915 to pre-1975.
• New relief category: A tax deduction will now be available for the conversion of commercial properties into residential units, including ‘over the shop’ premises. Notably, no building age restriction will apply to this category.
• Increased relief cap for enterprises: Where works are carried out by businesses, the maximum relief available will rise from €200,000 to €300,000, in line with EU State Aid thresholds.
• Greater flexibility in claiming the relief will be introduced, with further operational details to be outlined in Finance Bill 2025.

In addition, the scheme will be extended to five regional centres identified under the National Planning Framework: Athlone, Drogheda, Dundalk, Letterkenny, and Sligo. The process of mapping Special Regeneration Areas in these locations will commence shortly, in collaboration with the relevant Local Authorities.

Residential Zoned Land Tax (RZLT)

Budget 2026 introduces further refinements to the RZLT framework, aimed at improving fairness and administrative clarity for landowners. Key updates include:

• Additional submission window: Landowners will be given a further opportunity to request a change in zoning for land included on the revised 2026 RZLT map. In certain cases, successful submissions may result in an exemption from RZLT for 2026.
• Exemption during planning appeals: A new exemption will apply where An Coimisiún Pleanála proceedings are initiated by a third party in relation to a grant of planning permission for a relevant site. RZLT will not apply while such proceedings are pending.
• Legislative amendments: Consequential changes arising from the Planning and Development Act 2024, along with technical amendments to ensure the RZLT legislation operates as intended, will be included in Finance Bill 2025.

These measures aim to support landowners navigating zoning and planning complexities, while maintaining the policy objective of encouraging the activation of zoned residential land.