VAT on sale of completed apartments
As expected, the Minister reduced the VAT rate as applied to the sale of completed apartments from 13.5% to 9%, in order to address the viability gap in apartment construction. This measure has immediate effect and will last until 31 December 2030. Further detail will be provided in the Financial Resolution.
Construction costs
In a further measure designed to address the viability gap in relation to apartment builds, the Minister announced an enhanced 125% corporation tax deduction for certain costs incurred on the construction of apartment developments and on the conversion of non-residential buildings into apartments. A minimum of ten apartments must be constructed and a deduction limit of €50,000 per apartment applies. The enhanced deduction will be available for projects where a commencement notice is submitted on or after 8 October 2025, up to 31 December 2030.
Cost rental housing
The Minister announced an exemption from corporation tax on rental profits arising from homes that fall within the Cost Rental Scheme. This exemption will apply to home developments that are designated as falling within the scheme from on or after 8 October 2025. This measure supports the government's commitment to accelerate the delivery of affordable homes.
Residential Zoned Land Tax
Residential Zoned Land Tax (RZLT) was introduced in Finance Act 2021 and applies to land which is zoned suitable for residential development and is serviced but has not been developed for housing, with the objective of increasing the national stock of zoned & infrastructurally serviced land while accelerating the delivery of housing across the country. It is an annual tax to be calculated at 3% of the market value of the land in scope. The tax came into effect on 1 February 2025.
Of the c. 2,000 RZLT returns filed to date, approximately a quarter have requested a deferral of the tax because the land is being actively developed within planning timelines.
The Minister also announced a further opportunity for landowners to avail of a RZLT exemption in 2026 if they seek to have their land rezoned to reflect the genuine economic activity being carried out. The exemption will be considered by Local Authorities based on guidelines issued by the Minister of Housing, Local Government and Heritage.
Further changes to enhance the operation of RZLT will be outlined in the Finance Bill.
Residential Development Stamp Duty Refund Scheme
The Residential Development Stamp Duty Refund Scheme provides for a partial repayment of the stamp duty paid on a deed of conveyance or transfer of land where the land is subsequently developed for residential purposes. The scheme was due to expire at the end of this year and the Minister today extended it until the end of 2030.
The Minister also introduced amendments to enhance the effectiveness of the scheme, increasing the two key time limits from 30 months to 36 months for (i) the period from acquisition to commencement of the development, and (ii) from commencement to completion, where an application for a stamp duty refund is made in respect of a large-scale residential development.
Further, a full stamp duty refund may now be claimed in respect of a multi-phase development at the commencement of the first phase of that development.
Retrofitting deduction for landlords
This relief was introduced in Finance Act 2022 and allows landlords to deduct certain expenses incurred on retrofitting rented residential premises in calculating rental profits. The Minister today announced the relief will be extended for a further three years.
Living City Initiative
The Living City Initiative supports the enhancement of older housing and commercial properties in the designated Special Regeneration Areas in Cork, Dublin, Galway Kilkenny, Limerick and Waterford. The Minister today extended the scheme to the end of 2030 and announced a number of substantial changes to strengthen the scheme, as follows:
Derelict Property Tax
The Minister today announced the introduction of a new Derelict Property Tax, which will be implemented and collected by the Revenue Commissioners, in order to target the activation of this housing stock. The new tax will replace the Derelict Site Levy, and the rate of tax is not intended to be less than 7% of the site market value.
Legislation providing for the Derelict Property Tax shall be brought forward in 2026. Preliminary registers of dereliction will be published in 2027 and the tax will be implemented as soon as possible after this date.
Irish Real Estate Funds (IREFs)
A public consultation process is being commenced on proposals to simplify the Irish Real Estate Fund (IREF) regime.