Vacant Homes Tax

VHT

Finance Act 2022  introduces a new Part 22B in the TCA 1997 to legislate for a vacant homes tax (VHT). The key objective in introducing this tax is to increase the supply of homes for rent or purchase by encouraging the owners of vacant residential properties to bring those properties back into use.

The tax applies to properties which are residential properties for the purposes of local property tax (LPT). Therefore, as with LPT, VHT applies only to habitable residential properties – it will not apply to derelict or uninhabitable properties.

A residential property is within the scope of the tax if it has been occupied as a dwelling for less than 30 days in a chargeable period. Each chargeable period l commences on 1 November and end on 31 October of the following year. The first chargeable period commences on 1 November 2022.

Charge

The amount of VHT payable for a chargeable period is three times the base amount of LPT payable in respect of the property for the year in which the chargeable period ends. The liability to VHT will not be adjusted by the local adjustment factor as decided by local authorities.

Finance Act 2023 amends the Vacant Homes Tax. The rate at which the Vacant Homes Tax is charged from three times to five times a property’s existing base Local Property Tax liability. The increase will take effect from the next chargeable period, commencing 1 November 2023.

Exceptions

A residential property does  not fall within the scope of the charge to VHT in certain circumstances. For example, VHT will not be charged on properties where no LPT was payable in respect of the year in which the chargeable period ends, properties that were sold during the chargeable period, or properties that were subject to a bona fide tenancy lasting at least 30 days during the chargeable period.

There are a number of exemptions from VHT in the legislation, which may be claimed by the chargeable person where the applicable conditions are met:

• death of the chargeable person in respect of a property, where the property was the sole or main residence of that person, in either the chargeable period or in the 12-month period prior to the commencement of the chargeable period.
• a grant to administer the estate of a deceased chargeable person issues in the chargeable period and for any chargeable period following such a grant, where the administration of the estate has not yet completed. This exemption applies only where the property was the sole or main residence of that person.
• the property was being actively marketed for
• the property was being actively marketed for
• the sale or occupation of the property was prohibited by a court
• the property was undergoing structural works, substantial repairs or significant refurbishment during the chargeable period.
• the property was not occupied by the chargeable person as a result of his or her mental or physical infirmity, where prior to this the person occupied the property as his or her sole or main residence.
• the property is owned by a North-South implementation body within the meaning of the British-Irish Agreement Act 1999.

Administration & Enforcement

The filing date for VHT returns is 7 November after the end of the chargeable period. The payment date for VHT is the following 1 January. The tax will operate on a self-assessment basis, which means that the obligation is on property owners to determine whether they are liable for VHT for a chargeable period and to satisfy their pay and file obligations. In addition, the Revenue Commissioners may request property owners to file a return for any chargeable period. Returns are to be filed electronically.

The legislation provides for penalties, interest and a late filing surcharge to be applied in cases of non-compliance.

The legislation provides for the Revenue Commissioners to establish a register of vacant homes and their associated chargeable persons.

The legislation also provides for the exchange of information between the Revenue Commissioners and other bodies such as local authorities for the purposes of administering the tax and maintaining the register. .