Budget 2024 saw the introduction of a number of new housing related measures to assist renters and landlords during the cost-of-living crisis and to support the housing market.
Some of the key measures announced are as follows:
Mortgage Interest Tax Relief
- Temporary mortgage interest tax relief has been introduced to support homeowners following a period of successive interest rate rises. Homeowners will qualify for the relief if the balance outstanding on their mortgage was between €80,000 and €500,000 as of 31 December 2022.
- The tax relief will be at a rate of 20% of the increase in interest payable in 2023 as compared to 2022, up to a maximum amount of €1,250. The property must be the principal private residence.
Rent Tax Credit
- The existing Rent Tax Credit has been increased from €500 to €750 per year. Parents who pay to rent a room for their student children can also now claim the Rent Tax Credit from year 2022 onwards.
Landlord Tax Relief
- A new tax relief measure for the benefit of landlords is to be introduced for a four-year period from 2024 to 2027. A landlord who lets a residential property for the full four-year period will see their rental income taxed at the lower rate of 20% for up to €3,000 of rental income in 2024; €4,000 in 2025 and €5,000 in 2026 and 2027.
- This will result in an annual benefit of up to €600 per annum in 2024 rising to €1,000 per annum in 2026/27. However, a tax clawback will apply where a property is removed from the rental market during these four years.
Help to Buy Scheme
- The Help to Buy Scheme has been extended until the end of 2025, and from 11 October 2023 onwards the scheme is amended to include those using a Local Authority Affordable Purchase scheme.
Vacant Homes Tax
- The Vacant Homes Tax is to be increased from three to five times a property’s base local property tax liability. The Vacant Homes Tax applies to a residential property in use as a dwelling for less than 30 days in a 12-month chargeable period.
Residential Zoned Land Tax
- The liability date for the Residential Zoned Land Tax has been extended to 2025, to provide more time for local authorities to finalise mapping and to allow affected landowners to engage with the mapping process.
- €5 billion has been allocated for housing capital projects in 2024. Funds will go towards the construction of 9,300 new build social homes, 6,400 affordable homes and an allocation of €242 million to support homeless services and accommodation.
The targeted measures introduced by Budget 2024 should be of assistance to landlords, tenants and mortgage-holders to offset some of the effects of the cost-of-living crisis and the continued rise in interest rates.
It remains to be seen whether the new Landlord Tax Relief will encourage smaller landlords to keep their properties in the rental market in the medium term as its intended effect.
Further detail on the above measures will be contained in the Finance Bill which is due to be published next week.
For Property advice or for further guidance on the implications of Budget 2024, please contact Kevin McCague, Property Solicitor or a member of the Lavelle Partners Property Team.