Budget 2025 saw the announcement of a series of tax measures to benefit both prospective buyers in addition to renters, alongside the announcement of €1.25 billion in additional funding to accelerate the building of new homes by the Land Development Agency. Stamp duty rates were also increased for higher value residential properties and bulk purchases, effective from today.
The rent tax credit is being amended to increase the amount that can be claimed from €750 to €1,000 (or €2,000 in the case of a jointly assessed tax-payer unit). This increase will apply in respect of the 2025 year of assessment.
In addition, the Minister also announced in his speech that in recognition of the cost-of-living pressures facing many renters right now, the credit will also be increased in 2024 to €1,000 and €2,000 respectively.
The Help to Buy scheme is an income tax measure intended to assist first-time buyers with the deposit required to purchase or self-build a new house or apartment to live in as their home. The scheme will be extended for a further four years, from the end of 2025 to the end of 2029.
The rate of the Vacant Homes Tax is being increased from five times to seven times a property’s existing base Local Property Tax liability. This increase will take effect from the next chargeable period, commencing 1 November 2024.
A third rate of Stamp Duty on higher value residential properties is to apply where the value/acquisition price involved exceeds €1.5 million. A new rate of 6 percent will now apply to the element of the value above €1.5 million. This change has immediate effect with normal transitional arrangements applying to transactions in process.
The existing 1 percent rate on residential properties valued up to and including €1 million, and 2 percent on any value above €1 million but below €1.5 million will continue to apply.
In addition, the Stamp Duty rate applied where 10 or more houses are acquired in any 12-month period is being increased from 10 percent to 15 percent, again with effect from Budget night. Transitional arrangements will also apply.
A deduction (capped at €10,000 per premises) from rental income for certain pre-letting expenditure is already available. This relief will be extended for a further three years to 31 December 2027.
Residential Zoned Land Tax (RZLT)
The RZLT is a new tax on land both zoned for residential development, and which has the necessary services in place to develop housing. The tax is designed primarily as a behaviour changing measure and not to be a significant revenue raising measure. RZLT is an annual tax, to be calculated at 3 percent of the market value of the land in scope.
Provision was made in the Finance Act 2021 for the RZLT. Amendments to the RZLT legislation will feature in Finance Bill 2024 which will provide for a further opportunity for RZLT landowners to seek a change in zoning in 2025 to a zoning which reflects the economic activity they undertake on the land.
Legislation will also be introduced to allow for 12-month deferral of RZLT liability between the grant of planning and commencement of development, exemption during Judicial Review Proceedings brought by a third party as well as technical amendments.
To ensure local authorities appropriately consider requests the Minister for Housing, Local Government and Heritage will issue guidelines to local authorities indicating that they should consider and accommodate rezoning requests where landowners seek to continue undertaking existing economic activity.
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