Revenue Note for Guidance

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Revenue Note for Guidance

644A Relief from income tax in respect of income from dealing in residential development land


This section provides for an income tax rate of 20 per cent to apply, up to and including the tax year 2008, to income from dealing in residential development land. Profits attributable to preparatory development work on the land up to, but not including, the laying of foundations are also included for the purposes of the 20 per cent rate.

These profits are ringfenced so that no offset for personal credits etc. is allowed. However, the taxpayer has the option of having these profits charged to income tax in the normal way, thus allowing the offset of personal credits against the profits. This ensures that in any year the taxpayer may choose the option which best suits his or her circumstances.

This special incentive rate of tax does not apply to such income for 2009 and subsequent tax years. From that time income from dealing in residential development land will be taxed under normal income tax rules.


This section provides for a rate of income tax of 20 per cent on profits or gains arising from dealing in residential development land.

(2) Specifically, the section applies to profits or gains which—

  • arise from dealing in or developing residential development land in the course of a trade consisting of, or including, dealing in or developing land, assessable under Case I, or
  • are gains of a capital nature from disposing of residential development land which, by virtue of section 643, are chargeable under Case IV of Schedule D.

(3) Profits or gains to which the section applies are charged to tax at 20 per cent and are not to be reckoned in computing total income for the purposes of the Income Tax Acts. In addition, they are not to be taken into account for the purposes of reliefs or exemptions under the Income Tax Acts.

(1)residential development land” is defined as land which satisfies one of the following three criteria:

  • land sold to a housing authority, the National Building Agency Limited or an approved body for the purposes of section 6 of the Housing (Miscellaneous Provisions) Act, 1992, provided that the land is specified in a certificate as being required for the purposes of the Housing Acts,
  • land in respect of which planning permission for residential development has been granted, or
  • land which is zoned residential.

“residential development” includes developments which are ancillary to the development and which are necessary for the proper planning and development of the area in question. Such ancillary developments would include shops, schools, churches, etc.

(4)(a) There are rules for apportionment of income and expenses of a trade as between dealing in residential development land and other activities by treating these two businesses as separate trades.

(4)(b) In computing the profits or gains to which the 20 per cent rate of tax is to apply, no account is to be taken of profits or gains that result from construction operations.

(4)(c) Where profits and gains, amounts receivable or expenses incurred are required to be apportioned as between different activities, that apportionment will be made in a just and reasonable manner.

(1) “construction operations” in relation to residential development land has the same meaning as in section 530(1) but does not include the following:

  • demolition of any building etc. on the land,
  • construction or demolition of roadworks, water mains, wells, sewers or land drainage installations, or
  • operations preparatory to residential development, other than laying of foundations.

The effect of this is that profits from development activities up to but not including the laying of foundations can qualify for the 20 per cent rate.

(5) If a person elects on or before the specified return date for the relevant year of assessment, this section does not apply for that year of assessment and the person will be taxed in the normal way.

(6) This section does not apply to income from dealing in residential development land arising to a person in the 2009 tax year and subsequent tax years.

Relevant Date: Finance Act 2021