Dáil Éireann Debate, Tuesday - 16 May 2023
276. Deputy Eoin Ó Broin asked the Minister for Finance the anticipated revenue in 2023 from the vacant property tax if it were to be increased to 1%, 2%, 3%, 4% and 5% with a vacancy rate of 3.2% and 7.8%, in tabular form. [23258/23]
View answerAs the Deputy is aware, the Vacant Homes Tax is a new measure announced in Budget 2023, which aims to increase the supply of homes for rent or purchase to meet demand. Legislative provision for the tax was made in the Finance Act 2022. 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. Therefore, there is no data available on which to base the costing sought by the Deputy.
A residential property will be within the scope of the Vacant Homes Tax if it has been occupied as a dwelling for less than 30 days in a chargeable period. The Vacant Homes Tax will be charged at a rate equal to three times the property’s existing base Local Property Tax liability, and must be paid in addition to Local Property Tax. A small number of narrow exemptions are available to ensure that home-owners are not excessively penalised for normal temporary vacancy. As with Local Property Tax (LPT), the Vacant Homes Tax will apply only to habitable residential properties - it will not apply to derelict or uninhabitable properties.
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 Local Property Tax (LPT) returns.
A preliminary analysis of the vacancy data was published by Revenue in July 2022, 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.
It should be noted that LPT returns provided information in relation to vacant properties as at the most recent LPT valuation date of 1 November 2021. Properties that were uninhabitable or unsuitable for use as a dwelling, as at 1 November 2021, are not liable for LPT and are not included in this analysis. The data on vacancy have not been verified by Revenue and they were collected for informational purposes only. The data provide an indicative profile of properties, rather than a definitive number of vacant properties.
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 was 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 to meet demand, rather than raise revenue. It is a new measure which comes into operation this year. 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.
