10/12/2025

Further to our previous briefing on Tax Measures to Support the Housing Market contained in the Finance Bill 2025, this briefing outlines the final legislative provisions introduced by the Finance Bill 2025 following Committee Stage amendments. The Bill has now been passed by Dáil Éireann and contains significant tax measures aimed at supporting housing delivery and regeneration.

VAT reduction for new apartment sales

Budget 2026 announced a VAT reduction from 13.5% to 9% for new apartment sales. This has been expanded since the initial introduction to cover construction services related to new apartments.

  • The measure initially only applied to the supply of apartments as part of a social policy. The Bill now provides that from 8 October 2025 to 25 November 2025 the new VAT rate will apply to the supply of qualifying new apartments, however from 26 November 2025 onwards, it applies to both the supply and construction of apartments and apartment blocks, including Purpose-Built Student Accommodation, where these are delivered as part of a social policy.
  • These measures will remain in place until 31 December 2030.
  • The definition of “apartment block” follows stamp duty law: a multi-storey building that comprises, or will comprise, not less than 3 apartments with grouped or common access. The Minister confirmed that “grouped or common access” means at least three apartments that share the same main entrance or external stairwell. Apartments with individual front doors can qualify provided this grouped access requirement is met, but duplex units remain excluded.
  • In relation to forward funding models, the 13.5% VAT rate will continue to apply to land sales. While this issue is under review, no change was made in the final Bill.

Revenue guidance is expected to follow to provide further clarity on the practical application of these measures.

Enhanced Corporation Tax deduction

The enhanced corporation tax deduction for apartment construction costs has been amended to accommodate forward funding structures, a key change aimed at addressing feasibility gaps in the initial proposal.

  • The deduction, as introduced, provided for relief in relation to the construction and refurbishment of qualifying apartment blocks (those of 10 units or more) with a deduction of 125% of eligible expenditure up to a maximum of €50,000 per apartment. 
  • The amendments introduced mean that the definition of “relevant person” now includes property developers and relevant contractors, and a new mechanism allows contractors to claim the deduction where a written declaration is provided by the beneficial owner. This ensures that approved housing bodies (AHBs) and institutional investors using forward funding arrangements can benefit indirectly from the relief.
  • To qualify, the contractor must be a company whose trade consists wholly or mainly of construction or refurbishment activities.
  • Again, these measures are subject to a sunset clause until 31 December 2030.

Other measures

A number of other schemes and reliefs were extended and enhanced by the Finance Bill 2025. These measures remain unchanged in the final Bill as passed. These include:

Cost Rental Income Corporation Tax Exemption

Rental income from dwellings designated as cost rental under the Affordable Housing Act 2021 are to be exempt from corporation tax. The exemption applies only to dwellings first designated on or after 8 October 2025, and providers must report qualifying units, rent received, and exempt profits in their tax return.

Stamp Duty Refund Scheme

The scheme has been extended to 31 December 2030. Full refunds are available for multi-phase developments once the first phase commences and the time limits for large-scale developments have been extended to 36 months. A clawback provision will apply if the final phase of the development is not completed within the required timeframe.

Residential Zoned Land Tax (RZLT) Amendments

Key changes introduced remain in place, including the ability for landowners to request zoning changes on the 2026 revised map which is set to be published by 31 January 2026. The window for submissions will close by 1 April. Following rezoning, the exemption will apply unless land is the subject of an ongoing planning process. A full exemption (rather than deferral) will now be available where development is delayed due to third-party appeals and judicial reviews. Deferral rules on death of a liable person have also been updated.

Retrofitting Relief for Landlords

The relief has been extended until 31 December 2028, with deductions claimable in the year of expenditure. The measure applies to up to three properties from 2026 (previously two).

Living City Initiative

The initiative has been extended to 31 December 2030 with a renewed scope, applying to properties built before 1975 as opposed to the previous limit of pre-1915. Relief for commercial or rented homes is now spread over two years and the cap has increased to €300,000. The restrictions on developers and connected parties have been removed and relief is now available for conversion of commercial or industrial buildings to housing, including “over the shop” units, with no age restriction on these properties.

Commentary

The final Bill strengthens the VAT reduction measure for new apartments by extending it to construction services and clarifying its scope, which should enhance its impact on apartment delivery. The inclusion of forward funding structures in the enhanced corporation tax deduction is a significant development, improving flexibility for AHBs and institutional investors. However, the VAT treatment of land sales in forward funding models remains unresolved and will require monitoring.