Tax incentives supporting residential property, homeowners, landlords and developers – key measures

We summarise the key tax incentives in place to support the development and maintenance of additional housing units. These measures are all part of the overall Government supports linked into the commitment to build an extra 300,000 residential housing units by the end of 2030.

Historically, well-targeted tax incentives have assisted in the construction and purchase of new residential properties and the repair and refurbishment of existing units.

VAT

The VAT rate on the sale of completed apartments was 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.

The reduced rate applies to:

• The supply of an apartment in an apartment block.
• The sale of a site on which an apartment, apartments (in an apartment block as defined) or an entire apartment block will be developed, as well as the development until completion of those apartments, such as under a forward funding arrangement.

Help to Buy (HTB) Tax Refund Scheme

The Help to Buy scheme provides an income tax and Deposit Interest Retention Tax (DIRT) refund of up to €30,000 to assist first-time buyers in obtaining a deposit for the purchase or self-build of a new home. The relief applies where applicants sign a purchase contract or draw down the first tranche of their mortgage within the qualifying period and satisfy the relevant conditions.

HTB eligibility criteria:

• Be a first-time buyer with no prior purchase or construction of a dwelling. Inherited property does not disqualify a claimant.
• Purchase or self-build a qualifying residence which has never been used or has not been suitable for use as a dwelling and costing no more than €500,000.
• Take out a qualifying mortgage satisfying the minimum 70% loan-to-value requirement, subject to specific exceptions for Local Authority Affordable Purchase Scheme participants.
• Be fully tax-compliant for the relevant four tax years.

Rates of relief

Enhanced rate (23 July 2020 – 31 December 2029): lesser of €30,000, 10% of purchase price/valuation, or income tax and DIRT paid.

Original rate (1 January 2017 – 22 July 2020): lesser of €20,000, 5% of purchase price/valuation, or income tax and DIRT paid.

How the process works

The process consists of an application stage, claim stage and verification stage. Applications and claims are made online. Verification is completed by the contractor (for purchases) or the solicitor (for self-builds). Payments are made either to the contractor as part of the deposit or to the claimant’s mortgage account.

Clawback provisions

A clawback may arise if the property is not occupied for five years, if mortgage or eligibility conditions are not met, or if the purchase or construction is not completed within two years. The clawback percentage depends on the year in which occupation ceases.

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. The credit is worth €1,000 to €2,000 per annum based on personal circumstances.

Pre-letting expenses

Tax relief on pre-letting expenditure has increased to €10,000 with the vacancy period reduced to six months and extended to 31 December 2027. The landlord tax credit is available from 2024 – 2027 and capped at 20% of rental profits with annual limits.

Mortgage Interest Tax Relief – certain owner occupiers

Mortgage interest tax relief has been extended for a further two years with a reduced value to apply in the final year.

The Mortgage Interest Tax Credit is provided for under s473C TCA 1997 and applies for the tax years 2023 to 2026 inclusive. The credit is available where a taxpayer has paid mortgage interest on a qualifying loan for their principal private residence, provided specific conditions are met, including that the outstanding balance on the qualifying mortgage at 31 December 2022 must be between €80,000 and €500,000.

The credit is calculated based on the increase in mortgage interest paid over the interest paid in 2022, with different rules depending on the year.

Only one credit is available per qualifying property, even if there are multiple claimants. The credit may need to be apportioned between them.

To claim the credit for a given year, all of the following must apply:

• Interest must have been paid in both 2022 and the claim year.
• Interest paid in the claim year must exceed the interest paid in 2022.
• LPT (Local Property Tax) obligations must be fully satisfied for the claim year.
• The mortgage must have been a qualifying loan throughout the relevant period.

Relievable interest is the difference between:

• Interest paid in 2023 over interest paid in 2022 – in respect of the 2023 tax year.
• Interest paid in 2024 over interest paid in 2022 – in respect of the 2024 tax year.
• Interest paid in 2025 over interest paid in 2022 – in respect of the 2025 tax year.
• Interest paid in 2026 over interest paid in 2022 multiplied by 50% – in respect of the 2026 tax year.

Relief cannot be claimed where:

• LPT obligations are not met.
• The property is not compliant with planning permission granted by 31 December 2022.
• The property was purchased from a connected person at above market value.
• Relief is being claimed in respect of a property where the claimant receives Oireachtas member accommodation allowances under s836 TCA 1997.

The credit is claimed after the end of the relevant tax year by filing either a Form 12 (for taxpayers with PAYE income only) or Form 11 (for taxpayers with income other than or in addition to PAYE income), whichever applies. A claim for credit is required to be accompanied by the following supporting documents, which must be uploaded either via ROS or via myAccount:

• Certificate of mortgage interest for 2022.
• Certificate of mortgage interest for the claim year.
• Confirmation of mortgage balance at 31 December 2022.

Where interest was not paid for a full calendar year in 2022 or the claim year, interest and the cap must be time‑apportioned using statutory formulas.

Enhanced corporation tax deduction for apartment construction

An enhanced 25% deduction (max €50,000 per unit) for qualifying apartment construction costs applies for developments with commencement notices between 8 October 2025 and 31 December 2030. This new measure allows an additional deduction of 25% of eligible expenditure, up to a maximum additional deduction of €50,000 per apartment, providing a net benefit of up to €6,250 per apartment (€50,000 x 12.5%). It will be provided to a developer that is the beneficial owner of the property at the time it is completed and is to be available for developments comprising 10 or more apartments. The enhanced deduction will be available on completion, on signing the Certificate of Compliance on Completion.

Residential Development Stamp Duty Refund Scheme

This scheme provides for a partial repayment of the stamp duty paid on the acquisition of land where the land is subsequently developed for residential purposes, subject to a number of conditions. The scheme was due to close to new commencements at the end of 2025 and has now been extended by Finance Act 2025 to developments that commence, pursuant to a commencement notice, before 31 December 2030. Time limits to avail of the relief have been extended, in the case of large-scale residential developments, from 30 to 36 months for both the period from site acquisition to commencement and from commencement to completion.  

For multi-phase developments, a refund will be available on commencement of the first phase of development. Where such a claim is made, the time limit from commencement to completion should apply from the date of the last commencement notice.

Cost Rental Scheme – corporation tax exemption

Rental profits from designated cost rental units qualifying on or after 8 October 2025 are exempt from corporation tax. Any rental losses, relief for pre-letting and retrofitting expenses in addition to relief for industrial building allowances and capital allowances related to qualifying cost rental scheme units are disregarded.

Companies in receipt of rental income in respect of qualifying Cost Rental Scheme units are required to file an annual corporation tax return which should disclose the number of qualifying Cost Rental Scheme units which are rented, the total rent receivable from the units and the profits attributable to those units. The exemption does not extend to any chargeable gains on the disposal of cost rental units which are taxable in the normal way.  

Living City Initiative expansion

The Living City Initiative has been extended to 2030 with expanded regional areas, increased expenditure caps, accelerated relief (50% per year) and broadened eligibility to buildings pre-1975. The scheme encourages the refurbishment of older buildings, providing tax relief to owner-occupiers, landlords and retailers.

• The term of the scheme has been extended to the end of 2030.
• Its scope in respect of residential properties is being increased from those built before 1915 to those built before 1975.
• It is being amended to support the use of “over the shop” premises for residential purposes.
• Where works are being carried out by enterprises, the maximum relief available is to be increased from €200,000 to €300,000 and greater flexibility is being provided on the time period over which the relief can be claimed.
• Five regional centres have been added to the existing designated special regeneration areas, to comprise areas within Drogheda, Athlone, Dundalk, Letterkenny and Sligo. These new regional centres add to the existing areas in Cork, Dublin, Galway, Kilkenny, Limerick and Waterford.

Retrofitting deduction for households

The income tax deduction for small landlords who retrofit their properties is to be extended for a further 3 years, to 31 December 2028. The measure was introduced in Finance Act 2022, to apply to expenditure incurred in the period from 1 January 2023 to 31 December 2025. The amount of any SEAI grant received is not considered to be expenditure incurred by the landlord and so would not qualify for deduction.

The relief will also now be allowed to be claimed in respect of the year in which the expenditure was incurred. The number of properties for which landlords can claim the relief is also being increased from two to three.

Key takeaways

The Help to Buy tax refund scheme offers real assistance to first-time buyers seeking to get on the property ladder with a starter home and can play a vital part in putting a deposit together. It only applies to new homes – it is not applicable to second-hand homes. First time buyers looking to buy a new home (or doing a self-build) may be eligible for the €30,000 tax refund. It should also be built into the decision-making process on whether to buy a new or second-hand house.

With ongoing increases to construction costs impacting developers, the reduction of the VAT rate to 9% on the sale of completed qualifying apartments, qualifying student accommodation and the construction of qualifying apartments and apartment blocks is an opportunity that offers real savings. To maximise its value, developers should engage with local authorities now.  

The above is linked with the enhanced corporation tax deduction for apartment construction, giving developers an enhanced 25% deduction for qualifying apartment construction costs. Again, developers should engage with their relevant local authorities to maximise the value of the exemption.

The stamp duty refund scheme would be beneficial for developers and reduce the overall costs of development.

The expansion of the living city initiative provides for additional scope for the scheme of tax relief for owner-occupiers, landlords and retailers applying until 2030 and bringing in additional areas. For those looking to acquire either residential property or retail space within the designated Special Regeneration areas, tax relief is available for refurbishing or converting residential and commercial properties. 

How Forvis Mazars can help

Our tax specialists support landlords, developers and homeowners in navigating existing and emerging schemes to ensure you receive all tax credits available to you. Get in touch with our team today to discuss how we can help.