Thomas Gould (Cork North Central, Sinn Fein)
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130. To ask the Minister for Finance the estimated number of properties the proposed vacant homes tax will return to use; and if he has considered an annually increasing approach to the tax. [55825/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the Vacant Homes Tax (VHT) is a new measure announced in Budget 2023, which aims to increase the supply of homes for rent or purchase to meet demand. Further detail on this measure is set out in the Finance Bill, which was published on 20 October.

The introduction of this tax follows from my Department's commitment under Housing for Allto 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 at: www.revenue.ie/en/corporate/documents/statistics/lpt/lpt-vacant-properties-report.pdf

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. Ultimately, the number of properties in scope and VHT payable will depend on the self-assessed returns submitted by property owners, the number of properties declared as liable and the number of property owners entitled to claim exemption from the tax.

As stated in my Budget speech, this measure aims to increase the supply of homes for rent or purchase, 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.

With regard to an annual increasing approach on vacancy taxation, a key consideration in developing and introducing this tax was simplicity. It is important to ensure that the taxation of vacant homes operates well alongside existing property taxation measures, and that it is easy to understand and administer. A tax which increases annually where a habitable residential property remains vacant year-on-year would be more complex to administer.

As this is a new measure, it is important to see how the tax operates after coming into effect, and then make an assessment as to whether it is working. My Department will monitor the tax and if it is not considered to be effective in bringing more properties into use, then I will have no hesitation in reviewing the measure including the rate, the operation of the tax and how it applies to long-term vacant property.