Property and infrastructure - Budget 2026

Capital investment in housing

The Minister announced €5 billion committed in capital investment for housing delivery in 2026, this being in addition to investment by the Land Development Agency and Approved Housing Bodies.

Additional funding of €200 million will be made available to homebuilders in the SME sector by way of Home Building Finance Ireland.

VAT

The VAT rate on the sale of completed apartments will be reduced from 13.5% to 9% with effect from 8 October 2025. The reduced VAT rate is to remain in place until 31 December 2030.

RZLT measure

An exemption from Residential Zoned Land Tax (RZLT), which came into effect on 1 February 2025, will be available in 2026 to landowners who make a submission to have their land rezoned to reflect the genuine economic activity being carried out.

An exemption from RZLT will also apply during a period where objections are brought by a third party in relation to a grant of planning permission. Further changes to enhance the operation of the tax will be brought forward in the Finance Bill.

Cost rental scheme

A new exemption from corporation tax on rental profits arising from homes that are designated as Cost Rental properties is provided for. The exemption is proposed in order to accelerate the delivery of affordable homes to the market, which has been struggling to meet demands and Government targets.

The rents for cost rental properties are set to cover the costs of delivering, financing, managing and maintaining them. This means that the rents are not subject to market pressures and properties are expected to be offered to tenants at rents at least 25% below market level. There are pre-existing rules governing the eligibility of tenants and the operation of letting processes to ensure transparency and compliance with the Cost Rental scheme’s objectives.

The exemption will apply in respect of properties designated as Cost Rental by the Minister from 8 October 2025.

Enhanced deduction for apartments

An enhanced corporation tax deduction is being introduced for qualifying apartment construction costs. The measure will allow an enhanced deduction of 125% of qualifying costs, up to a maximum additional deduction of €50,000 per apartment unit.

This will be provided to a developer that is the beneficial owner of the property at the time it is completed. The enhanced deduction will be available for projects comprising of 10 or more apartments. It will be available for both new-build developments and for conversion projects, including a change of use, such as the conversion of offices or retail spaces into apartments. The enhanced deduction will be available in respect of projects for which a Commencement Notice is submitted on or after 8 October 2025, and on or before 31 December 2030.

This new measure aims to reduce the amount of Corporation Tax developers have to pay on their profits. By lowering tax costs, the government hopes to encourage more apartment construction and boost housing supply.

Living City Initiative

The living city initiative, initially introduced to support the enhancement of older housing and commercial property in designated special regeneration areas in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford, is to be strengthened by way of:

• Extending it to the end of 2030.
• Increasing its scope, in respect of residential properties, from those built before 1915 to those built before 1975.
• Amending it to support the use of “over the shop” premises for residential purposes.
• Increasing the maximum relief available from €200,000 to €300,000, and providing greater flexibility on the time period over which the relief can be claimed, where works are being carried out by enterprises.
• Adding five regional centres to the existing designated special regeneration areas, being Drogheda, Athlone, Dundalk, Letterkenny and Sligo.

Derelict property

The proposed introduction of a Derelict Property Tax (DPT) was announced in place of the existing derelict site levy, which is an annual tax of 7% on the market value of sites within its scope. The levy continues to apply until the site is no longer deemed derelict, while unpaid levies attract interest of 1.25% per month.

The DPT will be implemented and collected by the Revenue Commissioners. Legislation will be brought forward in 2026.

Local authorities are to begin the process of identifying derelict properties in 2026 and preliminary registers of dereliction will be published in 2027. The aim is for the tax to be effective as soon as possible following the publication of the preliminary registers of dereliction.

The applicable rate of DPT is not yet decided but it is intended that it will not be lower than the current 7% levy applying for derelict sites.

Residential Development Stamp Duty  

The Residential Development Stamp Duty Refund Scheme, currently due to expire at the end of this year, will be extended until the end of 2030. The scheme provides for a partial repayment of Stamp Duty on the conveyance or transfer of land where the land is developed for residential purposes within a certain timeframe.  

The scheme is being enhanced by extending the time limits that apply to refund applications for large scale residential developments, for acquisition to commencement and for commencement to completion, from 30 months to 36 months. A full Stamp Duty refund claim is also proposed for multi-phase developments, which will be available at the commencement of the first phase of that development.

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.

Retrofitting households

The income tax deduction for small landlords who retrofit their properties is extended for a further 3 years, to 31 December 2028. If any SEAI grant is received by a landlord, the underlying will not qualify for deduction. The relief will also now be allowed to be claimed in respect of the year in which the expenditure is incurred and the number of properties for which landlords can claim relief is increased from two to three.

Rent tax credit

The rent tax credit, introduced in 2023 and due to expire at the end of 2025 has been extended to the end of 2028. There has been no change in the rate of the credit (€1,000 for a single individual and €2,000 for a jointly assessed couple).

Mortgage interest relief

The Minister announced the extension of mortgage interest relief for a further 2 years, with a reduced value to apply in the final year.

Capital funding measures

The government is to provide €275 billion over the 10-year period to 2035, prioritising funding for water, energy and transport as building blocks to deliver more homes.

In 2026, €19.1 billion is to be allocated for capital investment, to include funding to progress thousands of new build social homes.

€11.3 billion in funding is to be allocated to the Department of Housing, Local Government and Heritage, to include €7.2 billion for capital funding - the largest ever allocation for housing of which:

• €2.9 billion is to support the delivery of thousands of new build Social Homes and the second-hand acquisitions programme.
• €1.2 billion for the Starter homes programme, to deliver thousands of starter homes through a range of affordability supports alongside the Help to Buy initiative.
• €300 million will support regeneration of towns and urban areas through the Urban Regeneration Development Fund.
• €205 million will be allocated to a new housing activation infrastructure fund to support the work of a new Housing Activation Office.
• €140 million is to be allocated to retrofit further social homes.
• €130 million will fund up to 17,000 grants to adapt the homes of older people and people with a disability.

Higher education, research, innovation and science sector

An €810 million capital allocation to the sector was announced, to fund key infrastructure projects including:

• Support for the recently established Taighde Éireann to drive excellence in research, attract international research talent and promote knowledge transfer.
• Student accommodation projects at Maynooth University and University College Dublin.
• Development and operation of 11 technological university facilities.
• Two new veterinary medicine colleges to almost double the number of veterinary graduates.
• The progression of centres of excellence for retrofit skills, including Near Zero Energy Buildings and the National Demonstration Park for Modern Methods of Construction under Housing for All.