Budget 2025 – Property & Real Estate Key Measures
- HELP TO BUY SCHEME (HTB)
The Help to Buy Scheme is a tax rebate available to first-time buyers to purchase a newly built or self-built house or apartment where the cost of that purchase is below €500,000. The tax rebate is provided by way of a refund of the Income Tax and Deposit Interest Retention Tax (DIRT) that a purchaser has paid for the 4 years before the year of application. The HTB Scheme was increased in July 2020 so that first-time buyers who meet certain criteria could apply for a tax rebate up to a maximum of €30,000 or 10% of the price of the new build (whichever is the lesser) and is known as the enhanced HTB scheme (EHBS). In Budget 2025, the EHBS was extended to 31 December 2029.
- VACANT HOMES TAX (VHT)
A Vacant Homes Tax was introduced by the Government in 2023 to prompt an increase in the supply of residential properties available for rent or purchase. It applies to any residential property occupied for less than 30 days in a 12-month period, from 1 November to 31 October of the following year. Budget 2025 has increased the applicable tax rate from five to seven times the rate of Local Property Tax on that property and the property owner of the property is liable to pay the VHT. Last year, the Revenue Commissioners identified approximately 25,000 properties that may be subject to VHT. Evidently, the implementation and enforcement of this tax could go a long way to alleviating some of the pressure on the current crisis in the housing market.
- RESIDENTIAL ZONED LAND TAX (RZLT)
The Residential Zoned Land Tax applies to land which is serviced and zoned for residential purposes by encouraging landowners and developers to build residential developments on those lands. Originally introduced pursuant to the Finance Act, 2021, owners of lands which are zoned under the RZLT were to be taxed at a rate of 3% of the site’s market value from 1 February each year commencing in 2025.
The process for identifying lands which will be subject to the RZLT is being undertaken by the local authorities and this mapping process is continuing throughout 2024 and 2025. Whilst local authorities had published draft zoning maps last February, Budget 2025 has now given landowners further opportunity to seek changes to the zoning maps in advance of the final maps being published on 31 January 2025 with possible exemptions from the RZLT on foot of such amendments.
- RENT TAX CREDIT
A Rent Tax Credit (“the Credit”) has been available to tenants since 2022 and reduces the Income Tax that a tenant is due to pay. The amount of the Credit which can be claimed depends upon the amount of rent paid and income tax paid. The Credit is available where rent is paid for one’s principal private residence, on a property used to facilitate attendance at work or an “approved course” (an undergraduate or postgraduate course provided by publicly funded universities, colleges and institutes of higher education in Ireland). The rent payment must have been made under a tenancy entered into with the consent of the landlord.
Accordingly, parents who pay for their student children in full-time accommodation, such as “digs” or room rental arrangements in order for their children to attend an approved course will also be able to claim the Credit.
The maximum amount claimable under last year’s budget was €750 per individual. This has been increased to €1,000 per individual and €2,000 for a couple jointly assessed under Budget 2025 and will apply retrospectively for 2024.
- LANDLORD’S TAX CREDIT
A new tax credit for landlords was launched under Budget 2024 where they would benefit from a tax break worth between €600 and €1,000, rising each year that they remain in the market up to 2027. In 2024, €3,000 of income was taxed at the standard 20 per cent rate rather than the higher rate and this increases to €4,000 in 2025 with a further increase to €5,000 for 2026 and 2027.
- RESIDENTIAL PROPERTIES
A stamp duty rate of 6% is now payable on a residential property in excess of €1.5m from the 2 October 2024. However, in the event that a binding contract was entered into between the contracting parties prior to the 2 October 2024 and the assuring deed is executed prior to the prior to the 1 January 2025 then the pre-budget stamp duty rates will apply i.e. 1% up to €1m and 2% in relation to the remaining balance. The stamp rates of 1% payable on all residential properties with a consideration of €1m and a rate of 2% to the value of €1.5m will continue to apply.
- BULK PURCHASES OF RESIDENTIAL PROPERTIES
In an effort to tackle Ireland’s housing crisis, Budget 2025 introduced significant changes to address bulk purchases of residential properties. The stamp duty for buyers acquiring 10 or more residential properties within a 12-month period (excluding apartments) has been increased from 10% to 15%. This measure aims to discourage institutional investors and bulk buyers from dominating the residential market, leaving more room for individual buyers, particularly first-time homeowners. This change took effect immediately from the 2 October 2024. However, in the event that a binding contract was entered into between the contracting parties prior to the 2 October, and the assuring deed is executed prior to the prior to the 1 January 2025 then the pre-budget stamp duty rate of 10% will apply.
- MORTGAGE INTEREST TAX RELIEF (MITR)
Budget 2024 introduced a new temporary mortgage interest tax relief for twelve months for taxpayers who have an outstanding mortgage balance of between €80,000 and €500,000 on their principal home on the 31 December 2022 and who are compliant with the Local Property Tax obligations. MITR is being extended so that it will be available on the increased interest paid on the mortgage in 2024 over the interest paid in 2022. The tax relief on the increase continues at 20% and capped at €1,250.
- LAND DEVELOPMENT AGENCY
An additional sum of €1.25 bn has been allocated to the Land Development Agency as part of Budget 2025 bringing its total funding to €6.25bn. This will have a positive impact on housing advancing the supply of new homes.
This Moran & Ryan LLP material is not intended to provide, and does not constitute or comprise, legal advice on any particular matter and is provided for general information purposes only. You should not act or refrain from acting on the basis of any information contained in this material, without seeking appropriate legal or other professional advice.
Louise Wright
Partner
T: + 353 1 5450374
E: lwright@moranryan.com
Aideen Veale
Senior Associate
T: + 353 1 8725622
E: aveale@moranryan.com