Capital Gains Tax rate reduction
As announced in Budget 2027, the standard rate of Capital Gains Tax (CGT) has been reduced from 33% to 31% for asset disposals made on or after 7 October 2026. The 33% CGT rate will, however, continue to apply to disposals of development land and of unlisted shares deriving their value from development land. In simple terms, development land for this purpose means land in the State that is worth more than its current use value because it has potential for development.
Derelict Property Tax
The Bill provides for the introduction of a self-assessed Derelict Property Tax (DPT). DPT will be levied annually at a rate of 7% of the market value of certain derelict residential and non-residential properties. It will be rolled out on a phased basis. The first phase will apply to towns and cities with a population of 4,000 or greater. The threshold will reduce to towns and cities with a population of 2,000 or greater from 2028.
It is proposed that DPT be charged based on the following process, commencing in 2027:
- Local authorities will identify derelict properties and publish a preliminary register of these properties annually, on or before 1 September.
- Following a submission and appeals process, a final register will be published annually by 28 February of the following year.
- DPT will be charged on derelict properties appearing on the final register. Payment will be due by 23 June following publication of the relevant final register. The first payment deadline will be 23 June 2028.
Credit may be available where Local Property Tax and/or Vacant Homes Tax is paid on the same property. In addition, deferrals of DPT are allowed during active remediation works or for recent ownership transfers where remediation works are planned. In these cases, the deferred DPT charge may be cancelled where the completion of the remediation works is verified by the relevant local authority.
The introduction of DPT is subject to a commencement order by the Minister for Finance. DPT therefore will not automatically commence on 1 January 2027 even if the Bill has been passed by that date.
Residential Zoned Land Tax
Residential Zoned Land Tax (RZLT) applies an annual 3% charge to the market value of ‘serviced’ land that is zoned for residential use. The term covers land that is already connected or able to be connected to public infrastructure and facilities. The scope of RZLT is based on maps published by local authorities.
The Bill proposes to grant landowners an opportunity to request re-zoning from local authorities following publication of the 2027 RZLT map in January 2027. A RZLT exemption for 2027 may apply where a re-zoning request has been made by a landowner and has been acknowledged by the local authority. Re-zoning requests – and therefore the corresponding 2027 RZLT exemption – would not apply to land that is the subject of a current residential planning application. They would also not apply where there is a live planning permission allowing residential development of the land.
The Bill also facilitates information sharing between Tailte Éireann and Revenue relating to RZLT.
Rent-a-room relief
Rent-a-room relief is an income tax relief allowing individuals to earn tax-free rental income for renting out a room in their sole or main residence. The Bill proposes expanding the relief in the following ways:
- The relief will be temporarily extended to certain ‘auxiliary dwellings’ from 27 July 2026 to 31 December 2030. These auxiliary dwellings must be located within the grounds of the main residence and meet relevant planning conditions including notification requirements.
- The annual tax-free income threshold will increase from €14,000 to €16,000 effective from 1 January 2027. The threshold applies to the combined income from the main residence and any auxiliary dwelling.
An important point to note is that the threshold is an "all-or-nothing" threshold. This means that where combined qualifying income exceeds €16,000 in a given year, the entire amount becomes taxable, not just the excess.
Help to Buy Scheme
The Help to Buy Scheme assists eligible first-time buyers with accumulating a deposit to purchase or build a new residential property by providing an income tax refund. The Bill proposes to increase the limits of the potential maximum refund to the lesser of:
- €35,000 - up from €30,000
- 10% of the purchase value or approved valuation of the property - up from 5%, or
- The amount of income tax and DIRT paid by the individual for the four years prior to their application, which remains the same as before.
The Scheme continues to apply only to properties with an open market value of €500,000 or less.
Conclusion
Finance (No. 2) Bill 2026 introduces a number of significant changes for the built environment sector. Property owners and developers should consider how the proposed measures may affect their properties and businesses.
For more information and expert advice, contact our Tax team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.