Real Estate and Housing

Update on key measures

1) Rent a room relief – Higher threshold and increased application  

In line with the announcement made on Budget Day, the Bill proposes to raise the annual Rent-a-Room Relief threshold from €14,000 to €16,000 from 1 January 2027. If a homeowner lets rooms both in their main home and in a qualifying auxiliary dwelling, the €16,000 limit applies to the combined rental receipts, not separately to each. 

The relief would also cover rooms in a qualifying small dwelling within the grounds of the owner’s main home for the period from 27 July 2026 to 31 December 2030. The accommodation must meet the relevant planning conditions, including notification requirements. Owners should check those conditions before assuming that a garden or ancillary dwelling qualifies. 

The Bill expressly safeguards certain other tax reliefs such as principal private residence relief from capital gains tax and mortgage interest relief from income tax when the rooms are in the main home. It does not provide the same explicit safeguard regarding income from a separate auxiliary dwelling. 

2) Help to Buy Scheme – Higher maximum refund 

First-time buyers can receive up to €35,000 under Help to Buy, an increase from €30,000. The proposed higher maximum applies where a buyer enters into a qualifying purchase contract between 7 October 2026 and 31 December 2029. For a qualifying self-build, the first drawdown of the relevant loan must fall within that period. The amount actually available remains limited by the price or completed value of the home and the qualifying tax the buyer has paid; €35,000 is a ceiling, not an automatic payment. 

3) Residential Zoned Land Tax (“RZLT”) – Further rezoning opportunity 

The Bill provides a further opportunity for landowners whose land appears on the revised map for 2027, to be published on 31 January 2027, to request the relevant local authority to change the zoning of the land, and where certain conditions are met, to claim an exemption from the 2027 Residential Zoned Land Tax liability in respect of their land on foot of making such a request. 

A qualifying request could remove the 2027 RZLT charge, but the exemption is conditional. It may not be available where a current planning application or existing permission provides for residential development.  

4) Derelict Property Tax (“DPT”) – Scope and Timetable 

In line with the announcement made on Budget Day, the Bill proposes an annual tax equal to 7% of market value for properties entered on a local authority’s final derelict-property register, including associated land. Both residential and commercial buildings could be affected. The register process would initially cover specified built-up areas with at least 4,000 residents, expanding to areas with at least 2,000 residents from the following year. Owners would be able to make submissions and pursue review or appeal routes; a delay in payment may be available in defined circumstances, including qualifying repair works. This tax will be administered by the Revenue Commissioners and will be based on registers compiled by local authorities. 

The proposed timetable calls for preliminary registers by 1 September 2027 and final registers by 28 February 2028, with 23 June 2028 described as the first expected payment deadline.  

5) Other 

The following measures are in line with those announced on ‘Budget Day’:  

• Reduction in the rate of capital gains tax from 33% to 31% for disposals on or after 7 October 2026. Gains on development land sales remain subject to the 33% rate.  
• Rent tax credit increase from €1,000 to €1,150 for a single claimant and from €2,000 to €2,300 for a jointly assessed couple in 2027 and 2028.  
• Reduction in Investment Undertaking Tax (“IUT”) by 3% (38% to now 35%) from 1 January 2027. 
• No changes to the IREF or REIT tax regime have been announced.

Our view 

The measures announced today are consistent with those previously identified on Budget Day. 

As no significant no tax viability measures have been announced, the Government will be hoping the tax changes made in recent years together with continued significant capital investment in housing and infrastructure will make the difference in driving additional supply. 

The higher Rent-a-Room Relief threshold and its proposed extension to qualifying accommodation within a homeowner’s grounds is intended to optimise use of existing space. However, the €16,000 threshold applies to combined receipts from the main home and any separate auxiliary dwelling unit. To qualify, the separate unit must meet the relevant planning conditions (they must be between 32 and 45 square meters, installed after 27 July 2026, and compliant with the 2026 Planning Regulations). In addition, the Bill does not give income from that separate dwelling the same explicit protection for certain other tax reliefs as income from rooms in the main home. 

The increase in the Help to Buy maximum may provide welcome assistance to eligible first-time buyers, although €35,000 is a ceiling rather than an automatic refund. The higher rent tax credit should offer modest relief to eligible tenants in 2027 and 2028. Neither measure, on its own, addresses the availability of homes; their value will be greatest alongside measures that increase supply. 

For landowners, the further Residential Zoned Land Tax rezoning opportunity provides a route to challenge the treatment of land that may not be suitable for housing. The proposed exemption from the 2027 charge is conditional, however, so owners should not assume that making a request removes the liability. Owners will also need to weigh the potential tax benefit against the commercial implications of changing a site’s zoning.  

The new derelict property tax is potentially the Bill’s most significant measure for both residential and commercial owners. A charge of 7% of market value should create a strong incentive to bring property back into use, but fair and timely register, appeal and repair-related deferral processes will be essential particularly where an owner is already undertaking genuine works. Records of the property’s condition, ownership, valuation, planning position and progress of works could be needed to support an appeal, a return or a claim to defer payment. 

There is also a financial cost to getting compliance wrong. The Bill provides for interest on overdue tax, surcharges for late returns and penalties in certain circumstances, including failures to keep required records. Owners with properties that may be affected should therefore keep the emerging registers and deadlines under review, establish a clear evidence trail early and plan for the possibility of a material annual charge.  

The proposed reduction in capital gains tax forms part of a broader package of measures intended to support and expand domestic investment. The lower CGT rate is also expected to strengthen Ireland’s competitiveness in attracting international investment.  

The lower Investment Undertaking Tax rate may be relevant to some investment structures.  No material changes have been announced to the taxation of real estate funds (i.e. IREF or REIT regimes).