In Budget 2023, a new tax credit was announced for those taxpayers who are paying rent in respect of a residential property and who do not get any other housing support, such as the Housing Assistance Payment. While some details of the credit were known at the time of its announcement, the full scope of the relief is included in Finance Bill 2022, which was released on 20 October.
Rental payments in respect of an individual’s principal private residence, a residence to facilitate work or college, or a residence of a qualifying child attending college will, subject to satisfying the required conditions, qualify for relief. Where rent is paid on behalf of a qualifying child, neither the child nor the individual can be a relative of the landlord, the child must be using the property to facilitate him/her to undertake an approved course, and the tenancy must be registered with the Residential Tenancies Board.
The value of the tax credit is equal to the lesser of 20 per cent of the qualifying rental payment made and €500, or €1,000 in the case of a jointly assessed couple. Thus, a maximum credit of €500 per claimant will apply or €1,000 in the case of a jointly assessed couple.
This credit will apply in relation to the 2022 to 2025 years of assessment, inclusive.
It may be necessary for the claimant to provide Revenue with full particulars of the tenancy under which the qualifying rental payment was made in order to avail of the rental credit.
The Vacant Homes Tax (‘VHT’) will apply to residential properties and will be largely aligned to the existing Local Property Tax (‘LPT’) system in terms of its administration and assessment, in that the assessable period will run from 1 November to 31 October each year, with returns due by 7 November and payments to follow by 1 January. The first period of assessment will start on 1 November 2022. The VHT will be a self-assessed tax, with related interest/penalties for cases of non-compliance.
The VHT targets residential properties which are occupied for less than 30 days over the 12 month chargeable period. The VHT will be charged at the rate of 3 times the LPT lability applicable to the property.
As announced on Budget Day, the Bill provides for a number of exemptions to apply to the VHT which include the following:
The Scheme has been formally extended to 31 December 2024.
The Living City Initiative has been formally extended for a further 5 years to 31 December 2027. This is a tax incentive scheme which can apply to cases of refurbishment and conversion of residential or commercial properties in designated areas in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.
As announced on Budget Day, the relief available to owner-occupiers may now be claimed over a 7 year period (15% Year One and 10% for 6 years thereafter), with such provision to take effect in respect of expenditure incurred from 1 January 2023. The Bill also provides for the carry forward unused relief over the 7 year period, permitting such carry forward for up to 9 years after the first year in which the claim is made.
There is an increase in the eligible expenditure cap relating to a tax deduction for pre-letting expenses incurred on a property vacant from €5,000 to €10,000. The Bill also provides that the period for which a premises must be vacant has been reduced from 12 months to 6 months. This revised relief will be available for qualifying expenses up to 31 December 2024.
The Residential Zoned Land Tax was initially provided for under Finance Bill 2021. The impact of the tax will be impose a rate of 3% based on the market value of the land that, on or after 1 January 2022, is zoned as being suitable for residential development and is serviced. The Local Authorities have been preparing maps for the purposes of administering the tax which are due to be published in November 2022. The first charge to the tax will only apply from 1 January 2024 onwards.
Finance Bill 2022 includes some additional technical adjustments to the existing legislation, notably amongst these being a fixed penalty of €3,000 for failure to register and a link to surcharge on Income Tax/Corporation Tax returns for cases of non-compliance.
Finance Bill 2022 confirms the introduction of a levy of 5% on concrete blocks, pouring concrete and certain other concrete products which comply with certain European standards. The rate legislated for is half of that which was initially announced on Budget Day.
The levy is intended to address in part the costs of redress for those homeowners which have been impacted by defective concrete products. The levy will be administered on a self-assessment basis, and the first such chargeable period for the levy will run from 1 September to 31 December 2023. The levy will be payable within 23 days of the end of the chargeable period (i.e. first payments will be made by 23 January 2024). The chargeable periods thereafter from 1 January 2024 will run for six month period intervals.
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