Dáil Éireann Debate, Thursday - 20 April 2023
203. Deputy Paul McAuliffe asked the Minister for Finance if he will provide an update on the vacant home tax; the number of properties qualifying for the tax; the anticipated revenue from the tax in 2023; and if he will make a statement on the matter. [18816/23]
View answerThe introduction of the Vacant Homes 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 Local Property Tax (LPT) returns.
A preliminary analysis of the vacancy data was published by Revenue in July last 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
The analysis indicates that the vacancy rates captured by LPT returns are low across all counties, averaging nationally at 3.2%, which is within a range that is considered to be in line with a functioning housing market. It is important nonetheless that the Government acts to ensure all viable housing stock is being used. Accordingly, a new Vacant Homes Tax was announced in Budget 2023 and brought into effect by Finance Act 2022.
A residential property will be within the scope of the new tax if it has been occupied as a dwelling for less than 30 days in a chargeable period. Each chargeable period will commence on 1 November and end on 31 October of the following year. The first chargeable period commenced on 1 November 2022. The first self-assessed returns are due on 7 November this year and the tax will be payable on 1 January 2024.
The Vacant Homes Tax will be charged at a rate equal to three times the property’s existing base LPT liability, and must be paid in addition to LPT. The number of properties in scope and the amount of tax 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 available exemptions from the tax. A small number of exemptions are available to ensure that home-owners are not excessively penalised for normal temporary vacancy.
This measure aims to increase the supply of homes for rent or purchase to meet demand rather than raise revenue. It is not expected to yield significant revenue, with estimates in the region of €3-4 million at most. 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.
In arriving at the estimates, 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.
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.
