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Budget 2025 was delivered on 1 October 2024 and included a range of new and updated measures which will affect the Irish Property market.
Finance Bill 2024 (the “Bill”) has now been published which sets out the legal framework in order to implement a number of these measures. While the Bill may undergo amendments as it passes through the houses of the Oireachtas in the coming weeks before being signed into law, we examine some of the key measures which are expected in Finance Act 2024.
Help to Buy Scheme
While originally due to expire at the end of 2025, the Help to Buy Scheme will be extended until the end of 2029, meaning that first-time purchasers of residential property will continue to avail of Income Tax and Deposit Interest Retention Tax refunds to assist in their home purchase.
Mortgage Interest Relief
The temporary mortgage interest tax relief provision – introduced in Budget 2024 as a measure to offset the financial burden faced by mortgage holders due to significant increases in interest rates – has been extended for one year. Mortgage interest tax relief will be available at the 20% standard tax rate on the increase in the interest paid in 2024 when compared to 2022, where the following conditions are met:
The mortgage is over the taxpayer’s principal private residence in Ireland.
The outstanding balance on the mortgage was between €80,000 and €500,000 on 31 December 2022.
The taxpayer is compliant with Local Property Tax requirements.
The taxpayer files a personal tax return with Revenue.
Stamp Duty Rates
A new third rate of Stamp Duty will be introduced in respect of the acquisition of residential property. The existing first rate of 1% will continue to apply to residential properties valued up to €1 million while the existing second rate of 2% will now apply to residential properties valued between €1 million and €1.5 million. The new third rate of Stamp Duty will apply to residential properties valued at over €1.5 million and will be chargeable at a rate of 6%.
In relation to “bulk acquisitions” [i.e. acquisitions of ten or more residential properties (other than apartments) within a period of one year], the rate will increase from 10% to 15%.
Certain existing Stamp Duty reliefs available in respect of farming will also face changes. Those seeking to avail of the Stamp Duty Relief for Leases of Farmland and the Young Trained Farmers’ Stamp Duty Relief must now incorporate their farming businesses, in order to continue to have access to those reliefs.
The increased Stamp Duty rates will apply to all instruments executed on or after 2 October 2024. However, transitional measures provide that increased rates will not apply to any instruments executed before 1 January 2025, where the instrument certifies that it is being executed in pursuance of a binding contract entered before 2 October 2024.
Vacant Homes Tax
The Vacant Homes Tax was introduced in Budget 2023 and applies to residential properties occupied for less than thirty days in a one-year period.
It was initially levied at three times the property’s basic Local Property Tax (“LPT”) liability. This increased to five times the basic LPT liability in 2024 and, as per Budget 2025, will increase further to seven times the basic LPT liability from the beginning of the next chargeable period, being 1 November 2024.
Residential Zoned Land Tax
The Residential Zoned Land Tax (“RZLT”) applies to land which is zoned as suitable for residential development but is not currently developed for housing. The RZLT will take effect on 1 February 2025 and will apply at a rate of 3% of the land’s market value.
The Minister for Finance indicated that, in an effort to avoid unduly impacting certain landowners, landowners who apply to have land falling within the scope of RZLT rezoned to reflect the genuine economic activity that the land is used for, will be provided with an opportunity to avail of an exemption from RZLT in 2025.
Capital Acquisitions Tax
The Capital Acquisitions Tax group thresholds will be increased as follows:
Group A: (Parent to Child) Threshold from €335,000 to €400,000
Group B: (Lineal Descendant) Threshold from €32,500 to €40,000
Group C: (No Relation) Threshold from €16,250 to €20,000
Conclusion
It is hoped that the announcements in Budget 2025 will have a positive effect for the property market, and we await the Finance Act to determine their full impact.
Further Information
Lavelle Partners’ Property Team have a wealth of experience in advising on all aspects of property law, providing in-depth advice on both commercial and residential property.
For expert legal advice on any Property matter or for guidance on the implications of Budget 2025, please contact Partners Nicola Walsh or Greg Flanagan in the Property Team.