29/10/2025
Insights Blog

Further to our previous briefing on the residential-focused tax measures announced in Budget 2026, this update outlines the legislative provisions implementing those measures set out in the Finance Bill 2025 (the Bill).   

VAT reduction for new apartment sales

  • Rate reduced from 13.5% to 9% for completed apartment sales. 
  • Applies to multi-storey buildings (≥3 units) with grouped/common access. 
  • Must be supplied for residential use as part of a social policy. 
  • Effective 8 October 2025 to 31 December 2030. 

The Minster for Finance confirmed during his Second Stage speech on the Bill last week that he will bring forward an amendment at Committee stage to clarify that the 9% rate applies to Purpose Built Student Accommodation that falls within the definition of apartment block, in line with the policy intention.  

The Minister also stated that, to maximise the impact of this measure on the supply of new apartments, he has asked his officials to examine the potential to broaden the scope of the 9% rate to also include site and construction services provided for qualifying new apartment developments. He also acknowledged later in the debate that the application of the VAT measure raises issues regarding approved housing bodies [i.e. forward fund transactions] and that he would examine at Committee Stage if any further amendments would be made in that respect. 

Corporation tax exemption – cost rental income 

  • Exemption applies to rental income from dwellings designated as cost rental under the Affordable Housing Act 2021. 
  • Only applies to dwellings first designated on or after 8 October 2025. 
  • Providers must report qualifying units, rent received, and exempt profits in their tax return.

Enhanced corporation tax deduction – apartment construction 

  • Available for construction/refurbishment of qualifying apartment blocks (≥10 units). 
  • Deduction of 125% of eligible expenditure, capped at €50,000 per apartment. 
  • Net benefit: up to €6,250 per unit at the 12.5% rate. 
  • Excludes financing, land, legal/professional fees, taxes, and levies. 
  • Applies to developments where the first Commencement Notice is lodged between 8 October 2025 and 31 December 2030. 
  • Claims must be made within 12 months of the end of the accounting period in which the Certificate of Compliance on Completion is lodged. 

Stamp duty refund scheme – extended 

  • Scheme extended to 31 December 2030. 
  • Full refund available for multi-phase developments once the first phase commences. 
  • Time limits extended to 36 months for large-scale developments. 
  • Clawback applies if final phase not completed within 30/36 months of Commencement Notice. 
  • Revenue will not repay stamp duty if clawback conditions are breached. 

Residential zoned land tax (RZLT) – key amendments 

Rezoning submissions
  • Landowners may request zoning changes for land on the 2026 revised map (published by 31 January 2026). 
  • Submission window: 1 February – 1 April 2026. 
  • Local authority must:  
    • Acknowledge by 30 April 2026; and 
    • Notify decision by 30 June 2026. 
Exemption following rezoning request
  • RZLT exemption applies unless land is subject to a current planning application or there is an extant permission for residential development. 
Appeal proceedings
  • RZLT now exempt (not deferred) where development is delayed due to third-party appeals. 
  • Applies from grant of planning permission and for duration of proceedings. 
Death of liable person
  • RZLT deferred until the later of:  
    • 12 months from grant of probate/administration; or 
    • 24 months from date of death. 
    • Deferral applies even if land is sold during estate administration. 

Retrofitting relief for landlords

  • Extended to 31 December 2028. 
  • Deduction now claimable in year of expenditure. 
  • Applies to up to 3 properties from 2026 (previously 2). 

Living City initiative

  • Extended to 31 December 2030. 
  • Applies to properties built before 1975 (previously 1915). 
  • Relief for commercial/rented homes now spread over 2 years. 
  • Cap increased to €300,000. 
  • Restrictions on developers and connected parties removed. 
  • Relief available for conversion of commercial/industrial buildings to housing, including “over the shop” units – no building age restriction on these properties. 

Commentary

The Bill introduces meaningful tax supports for housing delivery, particularly for large-scale apartment developments and cost rental schemes. The enhanced construction deduction and extended stamp duty refund scheme improve project viability and cashflow, while the cost rental income exemption supports long-term rental models. The expanded Living City Initiative and retrofitting reliefs offer new opportunities for regeneration and ESG-aligned investment, especially in urban centres. 

However, unless the relevant sections are amended during the legislative process, the limited scope of the 9% VAT rate may reduce its impact. Similarly, the Bill does not address RZLT treatment in forward funding structures. 

For a summary of key tax policy measures in Budget 2026, please see the Arthur Cox Tax Group’s briefing: Finance Bill 2025: What you need to know – Arthur Cox LLP. We will provide further analysis as the Bill progresses.  

Please contact a member of the Arthur Cox Real Estate or Tax group or your usual Arthur Cox contact for more information.