Finance Bill 2025 in relation to housing and property

Given the context of a continuing housing shortage and related infrastructure challenges and as announced on Budget Day, the Finance Bill contains many tax measures targeted at combating the housing crisis. These measures include the reduced VAT rate to apply to the sale of certain apartments, the Rent Tax Credit, measures connected with Residential Zoned Land Tax, an extension of provisions such as the retrofitting deduction and the Living City Initiative, a new exemption for properties designated as cost rental, and amendments to certain Stamp Duty measures. In a press release announcing the Finance Bill, Minister Donohue referred to the Bill providing “… for a suite of measures designed to support additional housing supply and encourage regeneration”.

VAT

The Bill contains, in Section 67, the measure announced in the Budget and effective from 8 October 2025 to 31 December 2030, to introduce a 9% VAT rate applying to the supply of an apartment in an apartment block, as that term is defined in stamp duty legislation (in s31E SDCA 1999) as follows:

“a multi-story residential property that comprises, or will comprise, not less than three apartments with grouped or common access”.

Section 67 of the Bill amends section 46 and Schedule 3 VATCA 2010 to provide for a reduction in the VAT rate applying to the sale of completed apartments from 13.5% to 9%.

The 9% rate will apply to the supply of housing, as part of a social policy, being the supply of an apartment, used or to be used for residential purposes, in an apartment block within the meaning of section 31E SDCA 1999 as defined. 

Removal of VAT on Property Waiver of exemption re property lettings

Section 71 of the Bill amends s96 VATCA 2010 to provide from the date of passing of Finance Act 2025 for the removal of the VAT on property waiver of exemption provisions and the cancellation of all waivers from that date. Revenue confirmed in an updated Tax & Duty Manual (TDM) issued on 23 June 2025 that Revenue will no longer (from 20 December 2024) seek to collect a cancellation payment when a waiver is cancelled.

This will mean that any lettings which are currently subject to VAT as a result of a waiver of exemption applying will default to becoming VAT exempt lettings when the Finance Act is passed, unless the landlord has exercised the landlord’s option to tax in accordance with the new rules in place since 1 July 2008.

Where it is not possible to exercise a landlord’s option to tax for example residential lettings and lettings where the tenant (or any other occupant) is connected to the landlord and has less than 90% VAT recovery entitlement, the landlord’s VAT recovery position could be impacted.

Rent Tax Credit

Section 3 of the Bill extends the Rent Tax Credit for a further three years to the end of 2028, at which point the credit is due to expire. The value of the credit remains unchanged at €1,000 for individual renters and €2,000 for jointly assessed couples, in the private rented sector, who are not in receipt of other State housing supports.

Mortgage Interest Relief

Section 4 of the Bill extends the mortgage interest relief for a further two years with a reduced value to apply in the final year. The relief is available to for taxpayers with an outstanding mortgage balance on their principal private residence (PPR) of between €80,000 and €500,000 as if 31 December 2022.

In line with existing conditions of the relief, the taxpayer must be compliant with Local Property Tax (LPT) requirements. Mortgage Interest Relief is available at the standard rate of income tax of 20%, with the maximum relief capped at €6,250 per property - equivalent to a tax credit of €1,250 per property for 2025 - and at €3,125 per property – equivalent to a tax credit of €625 per property for 2026. The relief will apply in respect of the increase in interest paid in 2025 over that paid in 2022, as well as the increase in interest paid in 2026 over that paid in 2022.

Living City Initiative

The Living City Initiative provides tax relief for expenditure incurred on refurbishment and conversion of residential and commercial properties in designated special regeneration areas in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford. Finance Act 2025 will be strengthened through the following measures:

• Extension of the relief to 31 December 2030.
• Increase in the scope for residential properties from those built before 1915 to those built before 1975.
• Support the use of “over the shop” premises for residential purposes.
• Where works are being carried out by enterprises, the maximum relief available will be increased from €200,000 to €300,000.
• The relief on qualifying expenditure incurred on or after 1 January 2026 can now be claimed over two years at a rate of 50% per annum.
• The period over which unused relief may be carried forward is extended from seven years to ten years.

In addition to the measures summarised above, the Minister for Finance announced in his Budget Day address the extension of the Living City Initiative to the five regional centres in the National Planning Framework, comprising Drogheda, Athlone, Dundalk, Letterkenny and Sligo.

Deduction for retrofitting

Section 30 of the Bill extends the income tax deduction available for small landlords carrying out retrofitting activities on their properties for a further three years to 31 December 2028. The measure was first introduced in Finance Act 2022. With effect from 2026, it will be possible to claim a deduction for retrofitting expenses in the year of expenditure (rather than in the following year) and the number of properties for which landlords can claim the deduction is increased, from two to three, for 2026 and onwards.

New corporation tax exemption for rental profits from Cost Rental Scheme units

Section 32 of the Bill introduces a new exemption from corporation tax in respect of rental income arising from properties designated as cost rental under Part 3 of the Affordable Housing Act 2021. A qualifying cost rental dwelling is one that is first designated as such by the Minister for Housing, Local Government and Heritage on or after 8 October 2025. This exemption will apply to all developments that are designated as falling within the Cost Rental Scheme by the Minister for Housing, Local Government and Heritage on or after 8 October 2025, while income arising from properties that were designated as cost rental dwellings prior to that date will not qualify for the exemption.

Enhanced corporation tax deduction for eligible construction expenditure

Section 40 of the Bill introduces a new enhanced corporation tax deduction in respect of certain construction costs incurred on both the development of new apartments and the conversion of existing non-residential properties to apartments.

The enhanced deduction can be claimed in a relevant property development trade, which is a trade carried out by a property developer that is not an excepted trade and consists wholly or mainly of the construction or refurbishment of buildings or structures with a view to their sale.

The enhanced deduction is calculated by reference to certain eligible expenditure incurred on the construction of a qualifying apartment block, which is a multi-story building consisting of 10 or more apartments, either newly erected or non-residential buildings converted into a qualifying apartment block. Developers can claim a deduction of 125% of qualifying apartment construction costs up to a maximum of €50,000 per apartment unit, providing a net benefit of up to €6,250 per apartment (€50,000 x 12.5%). The enhanced deduction will be available for projects comprising of 10 or more apartments and where a first Commencement Notice is lodged on or after 8 October 2025 and on or before 31 December 2030.

Eligible expenditure excludes any capital expenditure and ineligible expenditure. The new section defines "ineligible expenditure" in relation to a completed development as follows: 

• Financing costs.
• Insurance costs.
• Professional and legal fees.
• Sales and marketing costs.
• Taxes, duties, levies or charges under the care and management of the Revenue Commissioners
• The acquisition of, or rights in or over, any land.
• Levies, fees, charges or contributions imposed by, or under, any enactment in respect of the completed development concerned. 

The enhanced deduction is available in respect of the accounting period in which the relevant Certificate of Compliance on Completion for the completed development is lodged with the local authority in whose functional area the development concerned is situated.

A claim for the enhanced deduction must be made in the tax return within 12 months from the end of the relevant accounting period to which the claim relates. The eligible expenditure incurred in relation to the completed development and the number of apartments in the completed development must be disclosed in the tax return.

Amendments to certain Residential Zoned Land Tax (RZLT) provisions

RZLT is an annual tax calculated at a rate of 3% of the market value of land. The first RZLT returns were filed during 2025.

S99 of the Finance Bill makes a number of amendments to the RZLT legislation, as follows:

Opportunity for landowners to request re-zoning of land on 2026 revised maps

Section 653I TCA 1997 (Zoning submissions) is amended to provide a further opportunity for landowners to make a submission requesting a change in zoning of land appearing on the 2026 annually revised map to be published by 31 January 2026, and, in certain circumstances, being exempted from RZLT for 2026 on foot of such submissions.

Landowners had an opportunity to appeal the inclusion of land on 2026 draft annually revised maps by 1 April 2025, and a further opportunity to appeal a local authority determination to An Bord Pleanála (ABP) by 1 August 2025. The 2026 annually revised map is due for publication by local authorities on 31 January 2026. The amendment to section 653I means a landowner can make a submission to the relevant local authority requesting a change to the zoning of land included on the 2026 annually revised map between 1 February 2026 and 1 April 2026.

Exemption from RZLT for Relevant Appeal Proceedings

Section 653AF TCA 1997 (Deferral of tax during appeals) previously provided for a deferral of RZLT where a person could not commence development because planning permission granted in respect of the relevant site was the subject of appeal proceedings by an unconnected third-party.

The Bill amends this section to introduce an exemption, rather than a deferral, from RZLT, in respect of relevant appeal proceedings, bringing them in line with the treatment for corresponding judicial review proceedings. The exemption will apply from the grant of planning permission which is the subject of the proceedings and for the duration of those proceedings, irrespective of the eventual outcome.

Commencement of Non-Residential development

Section 653AG TCA 1997 (Sites developed wholly or partly for purpose other than residential development) provides that the commencement of non-residential development brings a relevant site, or part of such a site, outside the scope of RZLT and places an obligation on the owners of such sites to make a declaration to Revenue within 30 days of the lodgement of a commencement notice relating to non-residential development.

 The Bill amends this section to provide that where non-residential development commenced prior to the land becoming a relevant site, the owners of the land are required to make such a declaration within 30 days of the land becoming a relevant site.

Deferral of RZLT - Grant of planning permission

Section 653AGA TCA 1997 (Deferral of residential zoned land tax in respect of grant of planning permission) provides for a deferral of RZLT arising in respect of a relevant site within the first 12 months after the date of grant of planning permission.

The Bill amends this section to ensure that the RZLT deferred shall not be due and payable until the later of 12 months after the date of the grant of planning permission or the return date relating to the liability date on which the RZLT arose.

Death cases

There are minor changes to the RZLT provisions where the landowner dies.

Residential Development Stamp Duty Refund Scheme – extension and enhancements

S76 of the Finance Bill amends s83D SDCA 1999 which provides for a partial repayment of stamp duty paid in respect of a conveyance or transfer of land where the land is subsequently developed for residential purposes and certain conditions are met.

The Residential Development Stamp Duty Refund Scheme, currently due to expire at the end of this year, is to be extended until the end of 2030, for developments that commence pursuant to a commencement notice, before 31 December 2030 .

The Finance Bill includes a number of additional proposed amendments to the scheme, including:

• Extend the two time limits that apply (i.e. acquisition to commencement and commencement to completion) from 30 to 36 months for a large-scale residential development (which has the same meaning as it has in section 2 of the Planning and Development Act 2020 or section 82 of the Planning and Development Act 2024, once it comes into operation). 
• Allow for a full repayment of stamp duty to be claimed in respect of a multi-phase development once the first phase commences.
• Preclude Revenue from repaying stamp duty if any conditions to avoid a clawback of a repayment are not met.
• Where a residential development is carried out in phases and a repayment is claimed in relation to the entire residential development, the last phase must be completed within 30 months of the commencement notice for that phase to avoid a clawback. This is increased to 36 months for large-scale residential developments. 

The amendments to the scheme are intended to bring it more in line with current planning and development practices and to further support the delivery of new housing in a timely and efficient manner. 

Stamp Duty – miscellaneous amendments

Section 77 of the Finance Bill amends Schedule 1 SDCA 1999 to clarify that the stamp duty on a conveyance, transfer or lease (for any indefinite term or definite term of 35 years or more) is charged at rates of 1% (on the first €1 million), 2% (on the next €0.5 million) and 6% (on the excess), other than consideration attributable to three or more apartments in an apartment block which is charged at 1% on the first €1 million and 2% on the balance or a “relevant residential unit” (where 10 or more houses/duplexes are acquired in a 12-month period), which is charged at a rate of 15%.

The Finance Bill also includes technical amendments in respect of the “resting at contract” provisions that apply to contracts for sale or licenses of land and property thereon. These provisions apply where:

1. At least 25% of the consideration in respect of a contract for sale has been paid, and no conveyance of the property has occurred.
2. 25% of the market value of the land (in respect of a license) has been paid to the licensor, otherwise than as consideration for the sale of the land.

Where these provisions apply, the agreement is charged with stamp duty as if it were a conveyance or transfer of the land.  The technical amendments deem the contract or agreement to be executed on the date the contract or agreement becomes charged with stamp duty.