Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Section 97A TCA, introduced in Finance Act 2017, allows a deduction (capped at €5,000 per premises) from rental income for certain pre-letting expenditure on properties which have been vacant for at least 12 months and are subsequently let. To qualify, the expenditure must be incurred in the 12 months immediately prior to the letting.

As the Deputy is aware, in Budget 2023, I indicated my intention to increase the expenditure cap for pre-letting expenses from €5,000 to €10,000 with effect from 1 January 2023. Additionally, the period for which a property must be vacant before being let will be halved from twelve months to six months.

At the time of preparation of Budget 2023, the year 2018 was the most recent year for which Revenue data were available in respect of the cost of the existing measure.

In the last few days, cost data relating to 2019 have become available. These indicate that in 2019 the tax cost has remained broadly of the same order (€0.8 million).

It is estimated that for 2023, the cost of the measure will be of the order of €1 million. This estimate allows for an increase in deductible expenditure of the order of 30% next year. The cost is expected to potentially double to €2 million in 2024.

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As the Deputy is aware, the Vacant Homes Tax is a new measure announced on Budget Day, which aims to increase the supply of homes for rent or purchase to meet demand. Further detail on this measure will be made available on the publication of the Finance Bill on 20 October.

The introduction of this tax follows from my Department's commitment under Housing for All to collect data on vacancy with a view to introducing a vacant property tax. The Finance (Local Property Tax) (Amendment) Act 2021 facilitated the collection on data on vacant property through LPT returns.

A preliminary analysis of the vacancy data was published by Revenue in July this year, following the LPT revaluation in November 2021, and can be found on their website: www.revenue.ie/en/corporate/information-about-revenue/statistics/local-property-tax/lpt-stats-2022/index.aspx

In arriving at the estimates for the Budget documentation, certain assumptions were made based on the Revenue data and took into account the number of long-term vacant properties (those unoccupied for greater than 12 months), their valuation band, as well as their reasons for lying vacant which may correspond with an exemption from the tax. It is tentatively estimated that less than 15% of the total properties reported as vacant may be in scope of the tax.

As stated in my Budget speech, this measure aims to increase the supply of homes for rent or purchase to meet demand, rather than raise revenue The estimated yield is low, as I anticipate this tax will influence behaviour and lead to property owners putting their vacant properties to more effective use. As such, the number of properties who will be subject to this tax and the eventual yield may be lower than the estimates provided.