Budget 2024 contained a suite of new measures in the context of housing policy including an increase in the rental tax credit, the introduction of a new tax relief for landlords as well as a new scheme of mortgage interest relief for homeowners. In addition, amendments were made to a number of existing measures such as the Help-to-Buy Scheme, Vacant Homes Tax and Residential Zoned Land Tax.
Rental Tax Credit
Since its introduction in last year’s Budget, over 290,000 rent tax credit claims have been made with close to €166 million worth of claims made to date. The rent tax credit is now being amended to increase the amount that can be claimed from €500 to €750. As before, the credit will be available to renters who are not already availing of State housing supports. The proposal relates only to tenancies registered with the Residential Tenancies Board and licences for the use of a room in another person’s principal private residence. Eligibility for the credit will now also be extended to parents who pay for their student children’s rental accommodation in the case of Rent-a-Room accommodation or “digs”. This change will apply retrospectively to the years 2022 and 2023.
Rented Residential Relief
In addition to increased supports for tenants, the Budget also introduced a new tax relief for landlords. The new Rented Residential Relief will provide relief, at the standard rate, on a portion of a landlord’s residential rental income. The new relief apply as follows: €3,000 in the tax year 2024; €4,000 in 2025, €5,000 in 2026 and €5,000 in 2027 which is equivalent to a tax credit of up to €600, €800 and €1,000 respectively.
The relief will be clawed back if the landlord removes the property on which relief is claimed from the rental market within 4 years of the initial claim. However, no clawback will apply after the expiry of the 4-year period. The relief will apply only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled.
Mortgage Interest Tax Relief
In light of the current high interest rate environment facing many mortgage holders, Budget 2024 has also seen the introduction of a temporary one-year mortgage interest tax relief scheme for homeowners. Relief will apply to homeowners with an outstanding mortgage balance on their principal private residence of between €80,000 and €500,000 on 31 December 2022. Qualifying homeowners will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20 percent), capped at €1,250 per property. In order to claim the relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability for 2023 and may be claimed in early 2024.
Help-to-Buy Scheme
The Minister also announced the Government’s intention to extend the Help-to-Buy (HTB) scheme to the end of 2025. In addition, the scheme is also being amended to reflect its interaction with the Local Authority Affordable Purchase Scheme (LAAP). This amendment will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70 percent loan-to-value requirement, thereby facilitating greater access to the HTB scheme to all LAAP purchasers. These changes will come into effect from 11 October 2023.
Vacant Homes Tax
With a view to incentivising the use of existing housing stock across the country, the Minister has also announced an increase to the Vacant Homes Tax. With effect from 1 November 2023, the rate will be increased from three times to five times a property’s existing base Local Property Tax liability.
Residential Zoned Land Tax
Originally introduced in Budget 2022 as a measure “to encourage the use of land for building homes”, the Residential Zoned Land Tax (RZLT) aims to activate suitably zoned and serviced land for housing.
In order to afford affected landowners' sufficient opportunity to engage with the mapping process and ensure that a fair and transparent process is applied when local authorities consider what land should be placed on the RZLT maps, the Minister has announced an extension of the liability date for the tax by one year. The original liability date was 1 February 2024.
RZLT applies at a rate of 3 percent on the market value of land within its scope.
Defective Concrete Products Levy
As previously announced last month, this levy is being amended so that it will no longer apply to the pouring concrete used in the manufacture of precast concrete products. A refund scheme is also being put in place to allow those who paid the levy on such concrete between 1 September 2023 and 31 December 2023 to reclaim it.
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