Real Estate and Housing

Key measures

1. Flagged in the Budget

• Help-To-Buy: The scheme has been extended until the end of 2025. Further amendment made to ensure people availing of the Local Authority Affordable Purchase scheme can also qualify for HTB.
• Rent Tax Credit: The amount of the credit is increased from €500 to €750 per person per year (€1,000 to €1,500 in the case of jointly assessed couples). The relief is also available to parents paying for their student children who have tenancies in ‘Rent a Room’ or ‘digs’ accommodation. The amendment made in respect of student payments is deemed to have come into operation on 1 January 2022. This should allow for retrospective claims by parents for 2022.
• Vacant Homes Tax: The tax is increased from 3 times to 5 times a property’s existing base Local Property Tax (“LPT”) liability. The increase will take effect from the next chargeable period, commencing 1 November 2023.
• Mortgage interest relief: 20% tax relief on the increase in interest paid on relevant loans between 2022 and 2023. Relevant loan balance range is between €80k and €500k at 31 Dec 2022. Value of relief is capped at €1,250 per home. To qualify taxpayers must be compliant with LPT obligations. The relief operates by way of a credit offset against the taxpayer’s income tax liability in 2023. To claim the mortgage interest tax relief, the taxpayer must file a tax return with Revenue and provide the requisite information.
• Rented Residential Relief for Landlords (income tax relief for individuals): Subject to certain conditions being met, rental income of €3,000 for the year 2024, €4,000 for 2025 and €5,000 for the years 2026 and 2027, will be disregarded at the standard rate. A full clawback of the benefit of the disregard will apply in the event the landlord removes any property from the rental market in the four year period. This includes rented residential properties which have not benefited from the relief. Eligibility for relief is dependent on the landlord having tax clearance and complying with their Local Property Tax and RTB registration requirements. Also, Relief is not available where the property is let to connected parties such as relatives.
• Accelerated Energy Efficient Capital Allowances: The scheme is to be extended by 2 years until the end of 2025.
• Concrete levy: This levy is amended so that it will no longer apply to the pouring concrete used in the manufacture of precast concrete products.

2. New announcements

• Residential Zoned Land Tax (“RZLT”): Amendment made to exclude from the scope of RZLT land which, while zoned for residential purposes, is subject to land management objectives in the relevant local authority development plan or local area plan which have identified such land for phased, and not immediate, development. As indicated in the Budget, the 1st liability date for RZLT has also been moved from 1 Feb 2024 to 1 Feb 2025. Another change announced is to provide a further opportunity to landowners whose land will appear on a draft revised final map to be published on 1 December 2023 to request the rezoning of such land from the local authority in whose functional area the land is situated. The final map published on 1 December 2023 is intended to take account of land which no longer satisfies the relevant criteria.
• CAT mandatory reporting of interest free loans: This section which comes into effect on 1 January 2024 introduces a requirement for the beneficiary to deliver a CAT return to the Revenue Commissioners in respect of loans which satisfy certain criteria and the total amount outstanding on the loans exceeds €335,000 at any point in the reporting period. Relevant loans in this context is drafted broadly and includes:
  • a loan made to the person by a close relative,
  • by a company to a person where a beneficial owner of the company is a close relative of the person,
  • to a company by a person where the person is a beneficial owner of the company and the person making the loan is a close relative of that person, and
  • by a company to another company where the person is a beneficial owner of the borrower company and a close relative of that person is the owner of the lending company.
• New Qualifying Financing Companies Section: This section provides for interest deductibility for a qualifying financing company once certain criteria are met. A qualifying financing company is one which obtains third-party finance and advances this finance to a subsidiary for a qualifying business purpose. At first glance, intention appears to be that the taxable income in the holding company would be sheltered by the deduction available to the holding company on the interest expense on external borrowings.
• Amendment to existing 7 year CGT relief (Section 604A): New wording introduced to clarify that provisions within the TCA 1997 which deem a transaction to have occurred at market value (e.g. transfers between connected parties in certain cases) do not apply in the context of Section 604A (i.e. property actually has to have been purchased for market value or 75% of market value in the case of a purchase from a relative). This change has retrospective effective from 1 January 2018.
• Rental properties owned by retirement benefit schemes and approved retirement funds: New section introduced to ensure the exemption from income tax of rental income derived from properties owned by retirement benefit schemes and approved retirement funds is dependent on registration of the tenancies with the RTB.
• Non-Resident Landlord: Amendments made to clarify that where a tenant of a non-resident landlord pays rent to a collection agent, the tenant is not obliged to deduct and remit withholding tax to the Revenue Commissioners. In such cases, the collection agent may either deduct and remit to the Revenue Commissioners withholding tax at the standard rate of income tax, or may remain assessable and chargeable to tax for the rental income of the non-resident landlord.
• Landlord retrofitting expenditure: Amendment made to include properties which were previously subject to rent controls as eligible to claim a deduction for retrofitting expenditure under Section 97B. Section 97B is an existing section which provides a tax incentive for small-scale landlords who undertake retrofitting works while the tenant remains in situ. This section has the aim of attracting and retaining small-scale landlords in the private rental sector. The maximum amount of properties which a deduction can be claimed against is two and the maximum deduction per property is €10,000.
• Taxation of leases (trading): Section 37 provides for a number of amendments relating to the taxation of leases with a number of other consequential amendments. One amendment of note is the deductibility of lease rental payments by tenants as part of a trade are intended generally to be spread evenly over the life of the lease, irrespective of how the transaction is recorded in the company’s accounts.