Dáil Éireann Debate, Wednesday - 29 May 2024
55. Deputy Thomas Pringle asked the Minister for Finance the expected revenue yield from an increase in the vacant homes tax to ten times the annual local property tax rate in a full year; and if he will make a statement on the matter. [24141/24]
View answerThe Vacant Homes Tax (VHT) as announced in Budget 2023, 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 and states that a residential property will be within the scope of VHT, if it has been occupied as a dwelling for less than 30 days in a chargeable period.
VHT operates on a self-assessment basis, where the number of properties in scope and the amount of tax payable, depends 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.
The first chargeable period for VHT commenced on 1 November 2022 and ended on 31 October 2023. VHT in respect of the first chargeable period was charged at a rate equal to three times the property’s existing base Local Property Tax (LPT) rate, which is payable in addition to LPT. The first self-assessed returns were due on 7 November 2023 and the associated tax payable on or before 1 January 2024. As of April 2024, approximately 6,000 properties have been declared as vacant, with exemptions claimed in respect of approximately 2,500 of these properties. Approximately 3,500 properties have a liability to VHT, amounting to €2 million.
The second chargeable period commenced on 1 November 2023 and will end on 31 October 2024. VHT for this period will be charged at an increased rate, equal to five times the property’s existing base LPT rate, payable in addition to LPT. Returns in respect of this chargeable period will be due on 7 November 2024, with the associated tax payable on or before 1 January 2025. The yield for the second chargeable period will depend on the number of properties declared as liable for the tax.
While it is not yet known how many residential property owners may declare their properties as liable for VHT in the second chargeable period, if the numbers remained the same as the first chargeable period, it is tentatively estimated that there would be an approximate additional yield of €3.3 million, bringing the total estimated yield in the second chargeable period to €6.6m, should the VHT rate be increased to ten times the property’s existing base LPT liability.
It should be noted that VHT returns reflect the position at a particular point in time, and the estimated additional yield does not take into account any behavioural change.
