Finance Act 2021 introduced Part 22A Residential Zoned Land Tax (RZLT) into the Taxes Consolidation Act 1997. The RZLT is designed to prompt residential development by landowners, including farmers, of land that is zoned for residential or mixed-use (including residential) purposes and that is serviced.
RZLT is an annual tax, calculated at a rate of 3% of the market value of the land within its scope. The tax will be due and payable from 2024 onwards in respect of land which fell within the scope of the tax on or before 1 January 2022. Where land is zoned or serviced after 1 January 2022, the tax will be first due in the third year after the year in which it comes within scope.
It is important to note that, to come within the scope of RZLT, farmland must be both zoned for residential use and serviced. Farmland that is zoned for residential use, but which is not currently serviced, is not within the scope of the tax and will only come within the scope of the tax should the land become serviced at some point in the future. Land will be considered to be serviced for the purposes of the tax where it is reasonable to consider that the land has access to, or may be connected to, public infrastructure and facilities, including roads and footpaths, public lighting, foul sewer drainage, surface water drainage and water supply, necessary for dwellings to be developed on the land and with sufficient service capacity available for such development.
Where land meets the criteria to fall within the scope of the tax as set out above, a number of exclusions may apply. One exclusion which may be of relevance to certain farmers is that which relates to land which is zoned for a mixture of residential and other uses (and not purely for residential development) that is integral to the operation of a business carried out on or beside it. As such, farmland which is zoned for mixed use, including residential use, and which is integral to the operation of a farming trade carried out on or beside it, is excluded from the tax, even where such land is serviced.
A draft RZLT map was published by local authorities on 1 November 2022. The purpose of the draft map is to allow landowners, including farmers, to see if their land is within the scope of the tax. If a landowner sees that their land is included on the draft map and believes that it should not be, there are two separate courses of action open to them:
1. If the landowner believes that the land is not serviced or falls into one of the specific exceptions provided for in the legislation, they can make a submission to the local authority by 1 January 2023 seeking to have the map updated and their land removed from the map. The local authority will consider the submission and make a written determination on whether the land should stay on the map or be removed from it. If the landowner disagrees with the determination, they can appeal to An Bord Pleanála.
2. If the landowner believes that the land should not be zoned as suitable for residential development, they can submit a request to the local authority, again by 1 January 2023, seeking to have the land rezoned. The local authority will consider the request and, if appropriate, they will commence a variation procedure to alter the zoning of the land. This variation procedure, and the local authority’s decision on whether or not to commence one, is part of the normal zoning process.
It should be noted that, while residential properties may appear on the local authority RZLT maps, residential property which is subject to LPT is exempt from RZLT. Further information regarding RZLT maps and related submission/variation processes are available on each local authority website, or at www.gov.ie/rzlt.
Finally, Finance Bill 2022 proposes to introduce an exemption for land that is within the scope of the tax but is subject to a contract that precludes the landowner from developing it. For the exemption to apply, the contract must have been entered into prior to 1 January 2022, i.e., prior to the introduction of RZLT. For example, where a farmer leased land prior to 1 January 2022 and the requisite conditions are met, the farmer may claim an exemption from the tax for the period of the lease.
I would like to reiterate that it is important that landowners wishing to make a submission to a local authority regarding the zoning status of their land should do so by 1 January 2023 which is the deadline set down in legislation.
