Budget 2025 Housing Updates

Budget 2025 is here! Here is our summary of all the housing and property-related updates from the government's announcement:

Vacant and Derelict Property Tax:

The tax on vacant and derelict properties will increase, going to 7x the rate of Local Property Tax (up from 5x).

Landlords:

The existing tax relief for pre-letting expenses for landlords who are bringing vacant homes into the rental market has been extended until the end of 2027. Last year's tax breaks are also due to increase: €4,000 of rental income will be taxed at 20% (the equivalent of €800) for 2025. This is in line with last year's announcement and is not an increase on what was originally planned.

Renter's Credits:

The Renter’s Tax Credit will be increasing from €750 to €1,000 per person for both 2024 and 2025. As with previous years, couples can apply individually, as can housemates in the same tenancy.

Energy Credits:

Two energy credits will be given to all households on individual meters. If you have a shared supply with a main meter and then secondary split meters, please note that the credits will likely be applied to the main meter and then split between the units (apartments) coming off that supply. The two credits will total €250.

The first credit of €125 and will be applied before the end of 2024. The second credit of €125 will be in 2025, though the government have not yet announced when. They will also be extending the reduced VAT rate of 9% for gas and electricity until 30th April 2025.

Homeowners:

The mortgage interest tax credit has been extended for another year to apply to tax year 2024. There will also be a 20% tax relief on increased mortgage interest paid in 2022 vs 2024 for those with outstanding mortgage balances of €80,000-€500,000. This tax relief can be up to €1,250 per property, but will not exceed that amount. The tax relief does NOT apply to rental properties, only primary residences (so if you are a landlord, you cannot avail of this tax relief on your investment property - only on the home you live in).

Help to Buy Scheme:

The Help to Buy Scheme has been extended until the end of 2029. They have not increased the amount, which remains at a maximum of €30,000. The amount that you are eligible for is dependent on how much you have paid in income tax and DIRT for the four year prior to the one in which you are applying (so if you apply in 2025, they count your payments from 2024, 2023, 2022, and 2021).

Stamp Duty:

Effective immediately, Stamp Duty will be increasing from 10% to 15% for anyone who is buying 10 or more residential houses in a year (essentially, larger-scale landlords and investment funds).

Additionally, residential properties valued at more than €1.5M will incur a new stamp duty rate of 6% - also effective immediately. This applies only to the amount you pay above €1.5M, and the lower rates apply to the amounts below (1% for up to €1M and 2% for between €1M-€1.5M). So if you are purchasing a property that costs €2M, the initial €1.5M is taxed at the lower rates and the remaining €500,000 is taxed at 6%. However, the 6% rate will not apply if you are purchasing three or more apartments in the same apartment block - in that case, you will be charged 1% on the first million and 2% on the remaining balance.

Social and Affordable Housing:

In 2025, the government is aiming to acquire 10,000 new-build social homes; to establish 7,400 new social housing leases; and to add 2,165 new social homes via local authorities and approved housing bodies. They also hope to supply 6,400 affordable and cost-rental homes through the First Home Scheme, and other schemes that support the Land Development Authority.

Finally, they are aiming to renovate 2,300 existing and currently vacant social houses in order to bring them back into usable stock, and re-let them to those who are on the housing waiting list.

Homeless Services:

The government has allocated €303M of funding for 2025. This money is intended to help support local authorities to provide emergency accommodation and other services, such as Housing First, to help people exit homelessness.

That's all the property-related news from 2025's budget. If you are a landlord or considering becoming one and would like to know more about how this year's budget changes may affect you, give us a call at 021 427 9729 or email us at info@powellproperty.ie - we would love to have a chat with you.