Budget 2024 For the Property Market in Ireland
The 2024 budget for Ireland was unveiled with much anticipation, While the extension of the Help to Buy scheme was welcomed, the measures aimed at supporting small landlords will do little to stop their exodus from the rental sector. Overall, the budget was disappointing for property investors and landlords. The measures introduced were underwhelming and will do little to encourage landlords to remain in the rental market.
The Help To Buy (HTB) Scheme was extended for a further year until 31st December 2025 in its current format. In addition, The scheme has also been amended to include units purchased under the Local Authority Affordable Purchase (LAAP) scheme. This amendment will enable the use of the affordable dwelling contribution received through the LAAP scheme for the purposes of calculating the 70% loan-to-value requirement, thereby facilitating access to all LAAP purchasers to the HTB scheme. This will come into effect from 11 October 2023.
This is very welcome as it provides continued certainty for first time buyers and developers of new homes. The inclusion of the LAAP scheme is significant given the number of units currently under development earmarked for this sector of the market.
A new tax relief for landlords will provide a relief, at the standard rate, of residential rental income. The relief will be as follows:
€3,000 in the tax year 2024
€4,000 in 2025,
€5,000 in 2026 and €5,000 in 2027.
A full claw-back of the benefit of the relief applies in the event the landlord removes from the rental market, within 4 years, any of the rental properties held in year 1 when the benefit is claimed. There is no clawback after the expiry of the 4-year period.
The relief relates only to tenancies registered with the Residential Tenancies Board, or where a landlord lets a residential property to a public authority (including a Local Authority). In the case of joint ownership of a property, the relief will be divided in proportion to the percentage of the rental income to which each owner is entitled. Further detail will be set out in the Finance Bill.
In light of the current high interest rate environment, a temporary one-year mortgage interest tax relief is being introduced. The relief will be available to taxpayers in respect of their mortgage on their principal private residence in the State where:
• the outstanding mortgage balance was between €80,000 and €500,000 on 31 December 2022,
• the taxpayer is compliant with Local Property Tax (LPT) requirements.
Mortgage interest tax relief will be available at the standard rate of income tax in respect of the increase in the interest paid between the calendar year 2022 compared to the calendar year 2023. The maximum value of the relief is €1,250 per property. To claim the mortgage interest tax relief, the taxpayer must file a tax return with Revenue. The relief will operate by way of a credit offset against the taxpayer’s income tax liability in 2023. It is anticipated that the relief may be claimed in early 2024. Further detail will be set out in the Finance Bill.
The rent tax credit is being amended to increase the amount that can be claimed from €500 to €750. The credit will be available to renters who are not already availing of other State housing supports. The proposal relates only to tenancies registered with the Residential Tenancies Board and licences for the use of a room in another person’s principal private residence.
In addition, eligibility for the credit will be extended to parents who pay for their student children’s rental accommodation in the case of Rent a Room accommodation or “digs”. This change will also apply retrospectively to the years 2022 and 2023.
The rate of the Vacant Homes Tax (VHT) is being increased from three times to five times a property’s existing Local Property Tax liability with effect from November 1st, 2023.
The VHT is a self-assessed scheme administered by the Revenue Commissioners. A property is considered vacant for the purposes of the tax if it is occupied for less than 30 days in a 12- month period. The tax will be charged at a rate equal to five times the property’s existing base Local Property Tax liability – that is, the liability before the application of the Local Adjustment Factor (LAF).
The was no change to the exemptions for VHT
This 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 is also being put in place to allow those who paid the levy on such concrete between 1 September 2023 and 31 December 2023 to reclaim it.
The Residential Zoned Land Tax, or RZLT, is an important initiative to activate suitably zoned and serviced land for housing. It is important that affected landowners have sufficient opportunity to engage with the mapping process and that a fair and transparent process is applied when local authorities consider what land should be placed on the RZLT maps. The liability date of the tax has been extended by one year to allow for the planned 2024 review of maps to take place and to afford affected people with a further opportunity to engage with the process
This stamp duty relief is being extended to 31 December 2028. It reduces the rate of stamp duty applicable to intra-familial transfers of farmland from 7.5% to 1%..
There is a capital allocation of almost €3.9 billion for the Department of Housing, an increase of €354 million from the 2023 allocation. This funding will support an additional 28,000 households overall, by meeting the social housing needs of an additional 21,830 households and supporting a further 6,400 households to buy or rent at an affordable price. Measures to support this include:
New build social housing, supporting the delivery of 9,300 new build social homes.
Social homes will also be delivered through a continuation of a strategic acquisitions programme.
Capital funding being provided in 2024, coupled with Land Development Agency (LDA) investment and Housing Finance Agency (HFA) lending, will finance a range of affordability schemes and measures to deliver over 6,400 new affordable purchase and cost rental homes.
Reflecting the importance placed on Housing for All, the Government’s national strategy, there will be a record €5.1bn capital investment in housing in 2024 – made up of €2.6bn exchequer, €978m Land Development Agency (LDA) and €1.5bn Housing Finance Agency (HFA) funding.
Budget 2024 Website
Budget 2024 Taxation Measures