New tax on vacant homes: all you need to know if you have one

The Government has introduced a new vacant homes tax in the budget that is aimed at increasing the supply of residential properties as another response to the housing crisis.

How will the new tax work?

The tax will apply to any residential properties which are occupied for less than 30 days in a 12-month period. The tax will be introduced from next year.

Why is the tax being introduced?

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This is definitely not a revenue-raising measure. Budget documents published by the Department of Finance estimate that the tax will raise just €3 million to €4 million a year. It is intended to create more housing stock by encouraging people to put properties sitting vacant for most of the year into use. The aim is to encourage these property owners either to rent or sell these homes.

Introducing the tax, Minister for Finance Paschal Donohoe said in his budget speech that “maximising the use of existing housing stock” was a key objective of the Government.

How will the tax be levied?

The tax will be self-assessed and administered by the Revenue Commissioners.

[ Vacant homes tax will raise as little as €3 million a year ]

How much will people have to pay if they are eligible?

It will be charged at a rate that is three times the local property tax applying to the home. So, for example, let’s say you own a second home valued at €300,000 that is occupied for less than 30 days a year, you pay the annual €315 local property tax plus an additional tax of €945 a year, or three times the annual tax due on this property, because it is deemed eligible for the tax under the new rules. In total, as owner you would have to pay €1,260 a year under these two property taxes.

What properties will be eligible?

The department said the tax was aimed at long-term vacant properties that are unoccupied for 12 months or more. There are a number of exemptions. The tax will not apply to derelict homes or properties unsuitable for use as a dwelling not already covered by the local property tax system.

Mr Donohoe said exemptions will apply to ensure owners “are not unfairly charged where the property may be vacant for a genuine reason”. Tax will not be applied to properties that are recently sold or listed for sale or rent, properties that are vacant due to occupier’s illness or long-term care or to properties that are vacant due to significant refurbishment work.

So this tax is a stick to encourage a change in behaviour?

Yes. The department said the measure seeks to strike “an appropriate balance between incentivising owners of vacant homes to bring their properties back into use and not penalising homeowners for normal, temporary vacancy”.

Will holiday homes be affected?

It depends on how often they are used. If you only use your holiday home for a fortnight every summer and it is vacant for the rest of the year then you will have to pay vacant homes tax. It is likely that the vast majority of holiday homes are occupied for longer periods than this, particularly if your holiday home is in use at other times of the year.

How many vacant homes are there in the State?

On the night of Census 2022 in April of this year, there were 166,752 vacant dwellings and 66,135 unoccupied holiday homes. The department said that Revenue and preliminary Census data show that vacancy “lies within a range that is considered to be in line with a functioning housing market” but the Government felt that the new tax was still important to ensure all viable housing stock is made available for use.

How has the tax been received?

The reaction has been mixed. Pat Doyle, chief executive of the Peter McVerry Trust, a charity specialising in reusing vacant and derelict properties for social housing, said it has the “potential to increase the availability of all forms of housing.” Social Democrats housing spokesman Cian O’Callaghan TD said the tax was “too weak to work”, and that it was “typical of this Government’s approach to tackling the housing crisis – it is lacking in both ambition and urgency”.