Explore the latest & key changes in taxes affecting landlords from the Irish Budget of 2024 with our expert insights.
As the curtains rise on the Irish Budget for 2024, the property landscape undergoes significant transformations. Echoing the government’s commitment to housing sustainability and the well-being of small landlords. In this blog, we dissect the crucial updates related to:
Shedding light on the above implications for property owners across Ireland.
Rental Income Relief for Small Landlords:
Minister McGrath, in his budget speech, recognized the pivotal role played by small investors in the rented residential property market. With a staggering 86% of landlords owning one or two properties, this temporary tax relief will benefit this demographic. This temporary tax relief will be applicable from 2024 to 2027.
Changes in Taxes Affecting Irish Landlords
Rental income of up to €3,000 will be disregarded at the standard rate of income tax, for the 2024 tax year. This threshold rises to €4,000 for the 2025 tax year and further increases to €5,000 for both 2026 and 2027. Essentially, this relief translates into reduced tax obligations on residential rental income, offering potential savings of up to €600 in 2024, €800 in 2025, and a substantial €1,000 in both 2026 and 2027.
However, it’s crucial to note that a claw-back provision exists. If a landlord removes any of the rental properties from the market within four years of receiving the relief, the full relief granted will be reclaimed.
To qualify for this relief,
the tenancy must be registered with the Residential Tenancies Board, or the residential property must be leased to a public authority, including a Local Authority. The relief is capped at the tax liability on the rental income and is apportioned for jointly owned properties based on each owner’s percentage of entitlement.
The Revenue’s Budget 2024 Summary underscores that this relief is exclusively available to individual landlords. Additionally, landlords must possess tax clearance and adhere to their Local Property Tax (LPT) obligations.
Vacant Homes Tax (VHT) Increase:
In a bid to address housing vacancy, Finance Act 2022 introduced the Vacant Homes Tax (VHT). This tax applies to residential properties utilized as dwellings for less than 30 days in a ‘chargeable period.’ Currently levied at three times the property’s existing base Local Property Tax (LPT) liability. The returns for the chargeable period from November 1, 2022, to October 31, 2023, are due on November 7, 2023.
Changes in Taxes Affecting Irish Landlords
Minister McGrath, in today’s announcement, revealed a proactive measure to further discourage vacancy. Effective from the next chargeable period (01/11/2023 to 31/10/2024), the rate of VHT will increase to 5 times the property’s existing base LPT liability.
Minister McGrath emphasized the government’s priority in tackling vacancy, deploying every available lever to incentivize the utilization of existing housing stock. This includes deterrents like the VHT alongside supportive measures such as grants.
Conclusion:
Key Changes in Taxes Affecting Landlords in Irish Budget 2024 can summarised as follows:
The Irish Budget 2024 brings pivotal changes in property taxation, aligning with the government’s vision for housing sustainability. Small landlords stand to benefit from rental income relief. Whilst the Vacant Homes Tax takes a more robust stance against property vacancy.
Disclaimer: The information in this blog post is intended for general informational purposes only and should not be construed as professional advice. It is your responsibility to seek professional advice tailored to your specific situation.
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