Vacant Homes Tax

A new vacant homes tax (VHT) will be introduced in 2023 and apply to residential properties occupied for less than 30 days in 12 months.

The VHT will be subject to various exceptions for properties which are vacant for a genuine reason, such as:

  • Properties recently sold or listed for sale or rent;
  • Properties vacant due to occupiers' illness or long-term care; or
  • Properties vacant as a result of significant refurbishments.

The VHT will operate on a self-assessment basis and apply to all properties considered residential properties under the Local Property Tax (LPT) regime. The tax will apply at a rate of three times the current base LPT payable on the property.

Rental Tax Credit

A new annual tax credit of €500 will be available for taxpayers who rent their principal primary residence and are not in receipt of any state housing support. The credit will be available from 2023 and will also be claimable in respect of 2022.

Help-to-Buy Scheme

The Help-to-Buy scheme (HTB) will be continued at its current "enhanced" rates until the end of 2024.

The HTB helps first-time buyers of newly built homes to buy a new house or apartment. The scheme only applies to properties costing €500,000 or less. The HTB refunds income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four tax years.

The government has commissioned a report on the HTB, which will be published shortly and contains a number of recommendations to be considered in the future. 

Living City Initiative

The Living City Initiative (LCI) was introduced in 2015 and allowed various tax reliefs for money spent on refurbishing or converting residential and commercial properties in designated "special regeneration areas" in Irish cities.

The LCI will be extended until the end of 2027 and the allowable deduction for owner-occupier relief under the LCI will be increased from 10% of eligible expenditure per year to 15%. This means that eligible expenditure can be reclaimed over seven years instead of ten years. 

Zoned Land Tax

Maps being prepared by local authorities in respect of the zoned land tax (announced in last year's budget) will be published on 1 November 2022. Once the maps are published, people will be allowed to appeal the zoning status of their land by applying to the relevant local authority. The Finance Bill 2022 will introduce measures to streamline the administration of the zoned land tax.

The zoned land tax will apply to land zoned suitable for residential development that is serviced but not developed for housing. The tax will target land in zoned residential areas or areas which are zoned for a mix of uses, including residential use.  The tax will operate on a self-assessment basis and will be at a rate of 3% of the market value of the land. The zoned land tax replaces the vacant site levy.

Pre-letting expenses for landlords

A tax deduction was introduced in 2017 to allow landlords to deduct certain expenses incurred before a property is let out. The purpose of the deduction is to encourage landlords in the residential rental sector to return empty properties to the market as quickly as possible. 

The cap on the maximum tax deduction available to landlords for pre-letting expenses will double to €10,000, and the required period of vacancy for properties to qualify will reduce from 12 months to 6 months.

Stamp duty refund scheme

The partial refund available for stamp duty paid on non-residential land that is subsequently used for developing dwelling units will be extended until the end of 2025.

Defective concrete products levy

The mica redress scheme announced in 2021 for individuals affected by defective building products will be supported by a new levy on the construction sector. The levy will apply at a rate of 10% of the cost of a variety of specified concrete products (including pouring concrete) from 3 April 2023, broadly being:

  • Products primarily used in the construction of buildings;
  • Products primarily of a structural nature; and
  • Products composed primarily of concrete.

Other points to note

The Minister for Finance welcomed recommendations by the Commission on Taxation and Welfare on the Local Property Tax and a Site Value Tax and indicated that the government would consider reforms in the future. 

The Minister also indicated a review of Ireland's IREF (Irish Real Estate Fund) and REIT (Real Estate Investment Trust) regimes would be undertaken to determine how they could best support housing policy in the future.  

For further information on Budget 2023, please contact Brian Duffy or your usual William Fry Tax contact.