Residential Zoned Land Tax: Key Measures

The Residential Zoned Land Tax (“RZLT”) is a new Irish tax commencing in 2025 which aims to encourage the development of land which is zoned and serviced for residential development. The RZLT will place obligations on landowners to use existing planning permissions for housing development and subsequently aims to increase housing supply, particularly in urban areas.

In this article, we examine the key measures, applicable deadlines and relevant exclusions from the RZLT.

What is the Residential Zoned Land Tax?

The RZLT was introduced under the Finance Act 2021 (“the 2021 Act”) as part of the Government’s housing plan “Housing for All – A New Housing Plan for Ireland”.  The RZLT aims to utilise certain lands, described in the 2021 Act as “relevant sites”, which (1) are zoned solely or partly for residential use and (2) are serviced, or capable of being serviced, by certain public infrastructure such as roads and footpaths, public lighting, water supply and drainage. Landowners who fall within the scope of the RZLT will be required annually to pay an amount of 3 per cent of the market value of the land.

When will the RZLT Apply?

While it was initially intended that the RZLT would apply from 2024, the Finance (No. 2) Act 2023 deferred the first liability date of the RZLT until 1 February 2025.

Under the 2021 Act, there is an obligation on certain landowners to register with the Revenue Commissioners (“Revenue”) for the RZLT and, from December 2024, landowners will be able to register for the RZLT through Revenue’s Online System (“ROS”).

Who will be Liable to Pay the RZLT?

On 1 February 2024, local authorities published “draft maps” identifying lands falling within the scope of the RZLT. “Final maps” will be published by local authorities prior to the first liability date. These maps will be updated every year from 2025 onwards in order to account for any amendments made by the local authorities in respect of the lands affected by the tax.

Only land which met the criteria for the RZLT on or before 1 January 2022 will be liable to pay the tax for 2025. Land which met the criteria after this date, will become liable three years after the date at which it met the criteria.

The RZLT will continue to be levied against a relevant site unless residential development occurs on the land; or where non-residential development is carried out on the land or where the land is rezoned, and it is no longer suitable for residential development.

Which Lands are Excluded from Paying the RZLT?

There are several exclusions from the RZLT, including:

• Existing residential properties which are liable to pay Local Property Tax (“LPT”). However, it should be noted that such properties will still be required to register for RZLT (but not pay it) in circumstances where they have a garden or yard exceeding one acre in size and are included on a local authority final map.
• Land that, while zoned residential, is an authorised development used to carry on a trade or profession by a business liable to pay commercial rates.
• Land that is required for, or occupied by, other uses such as social, community or governmental infrastructure.
• Land that is subject to a statutory designation that may preclude development.
• Land in respect of which the Derelict Sites Levy is payable.

Summary of the Key Measures of the RZLT

• The RZLT will replace the Vacant Sites Levy.
• The RZLT operates on a self-assessment basis which means that the relevant landowners must assess the value of the land themselves and report it to the Revenue.
• The valuation date for the purposes of the RZLT will be 1 February 2025 for land that met the criteria on or before 1 January 2022 and which is contained in the local authorities’ final maps.
• Where land has been undervalued, Revenue may apply surcharges.
• The RZLT will be 3 per cent of the market value of the relevant land payable annually.
• Properties which are liable to pay LPT are not liable to pay the RZLT but will have to register (but not pay) for RZLT where the garden of the property is more than one acre in size.
• From December 2024, landowners will be able register for the RZLT through ROS.
• The RZLT is a more wide-reaching tax than the Vacant Sites Levy and will likely lead to the development of previously undeveloped lands.

Conclusion

It is important for landowners to be aware of the key measures contained in the RZLT.

If landowners are unsure as to whether their land falls within the RZLT threshold, a pro-active approach is recommended by checking the RZLT draft maps on local authorities websites, liaising with local authorities to clarify if the land is subject to the RZLT, and, where applicable, engaging with Revenue to register or defer the RZLT payment.

Further Information

For further guidance on the RZLT or for any ancillary Property advice, please contact Partners Nicola Walsh or Greg Flanagan or a member of our Property Team.