More than €2 million was collected by the Revenue Commissioners from the owners of more than 4,000 empty properties in the first year of operation of the vacant homes tax (VHT), according to figures released by the Department of Finance.
The tax was introduced in late 2022 and applied to residential properties used as dwellings for less than 20 days in a full year. The annual charge was three times the basic rate of local property tax (LPT).
Minister for Finance Jack Chambers disclosed that €2.36 million was raised from the tax during the first 12 months from 3,942 properties.
A further 2,713 properties declared as vacant were exempt from VHT. These were dwellings that were sold, subject to a tenancy, or had an exemption from LPT.
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The tax was introduced not to raise revenue but to incentivise property owners to sell dwellings that were left vacant. As a result, there will be progressively higher charges of VHT each year.
For the period from November 2023 to October 2024, the rate is five times the basic LPT. For the period from November 2024 to October 2025, it will increase to seven times the value of the basic LPT.
The basic LPT is the property tax that is charged on the property before adjustment by the local authority, who have power to increase or decrease the tax by 15 per cent.
Mr Chambers disclosed the figures in reply to a parliamentary question on the amount of revenue raised. The tax is self-assessed and a total of 6,655 returns were received by Revenue, of which 3,942 were liable for VHT.
[ HSE has more than 200 vacant properties on its books, internal audit findsOpens in new window ]
Dublin city had, marginally, the highest number of properties (342) liable to VHT, with a total of €620,000 raised. The other counties with the highest number of vacant dwellings were on the western seaboard and were in counties that had a high number of second homes, and holiday homes.
There were 339 vacant homes in Cork, 308 in Donegal, 298 in Kerry, 302 in Limerick and 236 in Mayo. The county with the lowest number of vacant homes liable to VHT was Carlow, with 25.
In briefing papers provided to Mr Chambers in June – when he succeeded Michael McGrath as Minister for Finance – Department of Finance officials advised against raising the tax further as it would “excessively penalise” a small group of property owners.
The briefing paper indicated that the current arrangement – where the rate increases progressively each year – was sufficient.
Officials advised that the tax was introduced to encourage behavioural change and to increase the supply of properties in the market. It said the aim behind the tax was not to raise revenue, per se.
A house in Dublin worth €500,000 is liable to pay €420 in property tax. In the first year of the vacant home tax, annual liability would be €1,260 for such a property, or three times the LPT.
In the second year, it would be €2,100, or five times the LPT. In the third year, from November 2024 to October 2025, it would be €2,940, or seven times the LPT.
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