Vacant homes are currently taxed through the Vacant Homes Tax (VHT), which was announced in Budget 2023 and legislated for in Finance Act 2022. 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. The tax operates on a self-assessment basis, where the number of properties in scope and the amount of tax payable depends on the self-assessed returns submitted by property owners, the number of properties declared as liable, and the number of property owners entitled to claim available exemptions from the tax. Each chargeable period commences on 1 November and ends on 31 October of the following year.
VHT was charged at three times a property’s base local property tax (LPT) charge in respect of the first chargeable period (1 November 2022 – 31 October 2023), and at five times a property’s base LPT charge in respect of the second chargeable period (1 November 2023 – 31 October 2024). VHT currently applies at a rate of seven times a property’s base LPT charge with effect from 1 November 2024.
Regarding derelict properties, in Budget 2026, it was announced that a new Derelict Property Tax (DPT) would be introduced. The aim of this tax is to encourage the activation of derelict properties and sites. It will replace the Derelict Sites Levy and will be collected by the Revenue Commissioners.
In order for the new tax to be successful on introduction, care must be taken in its design. A key issue is that the tax must apply in a consistent manner to all residential properties and sites that are derelict. Therefore, a lead-in time will be required for local authorities to identify all the relevant derelict properties in their area for inclusion on a register in a consistent manner.
Officials in my Department are engaging on an ongoing basis with Revenue on the design of this new tax in recognition of its potential impact on housing supply objectives. My officials are also engaging with the Department of Housing, Local Government and Heritage in relation to the existing levy and the key role of local authorities, which will be crucial to the effective implementation of the new tax.
I intend to legislate for the DPT as part of Finance Bill 2026. This is dependent on engagement from stakeholders and will also be influenced by any advice I receive from the Attorney General. This timeline is necessary to allow local authorities to prepare and publish a preliminary register of derelict properties in 2027, with the tax coming into effect as quickly as possible thereafter.
Once the Derelict Property Tax is operational, I am confident this will incentivise owners of derelict properties to take action to bring these homes back into use and ultimately contribute to our housing stock and housing supply targets.
