Ireland’s Budget 2024 (of October 10th 2023) contains a host of measures including a new scheme of mortgage interest relief for homeowners, rental tax credits, new tax relief for landlords, and amendments made to a number of existing measures including the Vacant Homes Tax, the Help-to-Buy Scheme and Residential Zoned Land Tax. Here is a quick overview of these measures.
Rental Tax Credits
Since October 2022 there have been around 290,000 rent tax credit claims worth close to €166 million. In Budget 2024, the Rental Tax Credit has been amended to increase the amount that can be claimed from €500 to €750. It will remain available to tenants who are not already availing of relevant existing housing supports. Properties and tenants registered with the Residential Tenancies Board (RTB) as well as licences for the use of a room in another person’s principal private residence come under this scheme. Eligibility will extend to parents who pay for their children’s student rental accommodation (Rent-a-Room, or “digs”). This change will apply retrospectively to the years 2022 and 2023.
Rented Residential Relief
In addition, Budget 2024 introduces a new tax relief for landlords. Known as the new Rented Residential Relief, it will provide relief at the standard rate on a portion of a landlord’s residential rental income. The numbers apply as follows: €3,000 in the tax year 2024; €4,000 in 2025, €5,000 in 2026 and €5,000 in 2027. This works out as the equivalent to a tax credit of up to €600, €800 and €1,000 respectively.
The relief will be taken back by government if a landlord removes the property (on which the relief is claimed) from the rental market within 4 years of the initial claim. After this 4-year period, there is no relief taken back, as the scheme will then expire in its current format. The relief applies only to tenancies registered with the Residential Tenancies Board (RTB), or where a landlord lets a residential property to a public authority including county council housing schemes. If a rented property is under joint ownership then the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled to.
Mortgage Interest Tax Relief
As increased mortgage rates have added a strain to those on tracker and variable rate mortages, Budget 2024 sees the introduction of a one-year mortgage interest tax relief scheme for affected homeowners. Relief will apply where there is an outstanding mortgage balance on the property owner’s principal private residence lying between €80,000 and €500,000 as of 31st of December 2022. Those who qualify will be eligible for mortgage interest tax relief in respect of the increased interest paid on that loan between the calendar year 2022 compared to the calendar year 2023 at the standard rate of income tax (20%), and will be capped at €1,250 per property. To claim the relief, the taxpayer will file a tax return with Revenue and the relief will operate by way of a credit offset against the taxpayer’s income tax liability for 2023 and can be claimed in early 2024.
Government announced its intention to extend the Help-to-Buy (HTB) scheme to the end of 2025. In Budget 2024, the scheme is being amended to reflect its interaction with the Local Authority Affordable Purchase scheme (LAAP). This will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70 percent loan-to-value requirement, allowing greater access to the HTB scheme for all LAAP purchasers. These changes came into effect immediately.
Residential Zoned Land Tax
Introduced in Budget 2022 as a measure labelled “to encourage the use of land for building homes”, known as the Residential Zoned Land Tax (RZLT). Its aims were/are to activate suitably-zoned and serviced land for housing. In order to afford affected landowners’ sufficient opportunity to engage with the mapping process and ensure that a fair and transparent process is applied when local authorities consider what land should be placed on the RZLT maps, the Minister announced an extension of the liability date for the tax by one year, moving from 1st of February 2024 to 1st of February 2025.
RZLT is applied at a rate of 3%t on the market value of land within its scope.
Vacant Homes Tax
The Minister announced an increase to the Vacant Homes Tax with effect from 1st of November 2023, with a view to incentivising the use of existing housing availability in Ireland. The rate will increase from three to five times a property’s existing base Local Property Tax liability.
Defective Concrete Products Levy
As announced in September, the Defective Concrete Products Levy is being amended so that it will no longer apply to the pouring concrete used in the manufacture of precast concrete products. A refund scheme will come into effect to allow those who paid the levy between 1st of September 2023 and 31st of December 2023 to reclaim it.