Measures to encourage smaller landlords to enter and remain in rental market vital in ensuring rental property meets demand
Budget 2023
Vacant Homes Tax may prove effective in discouraging the holding of vacant land
Landlords will be disappointed to see that today’s Budget provided no significant changes to the current regime. While the enhancement of deductible pre-letting expenditure in respect of certain vacant rented residential units is welcome the measure is unlikely deter the exodus of “mom and pop” landlords from the market.
Commenting on the measures announced, Shane Wallace, Tax Partner, Deloitte said:
Ireland’s rental market is under increasing pressure due to a surge in the numbers of households renting, coupled with fewer new rental properties coming to the market. Around 25,000 landlords have left the rental market since 2016, according to the Department of Housing officials, while the number of households renting in Ireland has increased almost 30% since the turn of the century.
The changes announced by the Minister to the tax treatment of pre letting expenses double the amount that may be claimed per premises to €10,000 and reduce the period for which a premises must be vacant from 12 to 6 months. These measures are hoped to enable landlords to make property suitable for prospective tenants in a tax efficient way.
Wallace continued;
The measures announced by the Minister are an acknowledgment that the costs of bringing a vacant premises into use have significantly increased from the time the relief was originally introduced. This change is line with comments made previously by the Tax Strategy Group.
The purpose of introducing a Vacant Homes Tax is to increase the supply of homes for rent or purchase i.e. to change behaviours as oppose to revenue generation. Commenting on the measures, Shane Wallace said:
This tax will apply to residential properties which are occupied for less than 30 days in a twelve-month period. The tax is to be levied at a rate which is three times that of the property’s existing basic local property tax rate. The impact of the Vacant Homes Tax on increasing supply may be modest as existing vacancy levels in Ireland are considered to be low.
Wallace concluded;
As with all new measures, we will await the final detail in this year’s Finance Bill. It is positive however that exemptions are to be provided for to ensure that owners are not unfairly charged where a property is vacant for a genuine reason.
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